ALEXANDRIA, Va. (10/31/08)--The National Credit Union Administration's (NCUA) 2009 budget is expected to increase 15% to $182.9 million and add 85 additional staffers to accommodate program modifications "necessary to address the current turbulent economic environment," said NCUA Executive Director Len Skiles yesterday.
During 2009, the overhead transfer rate is projected to be 55% and the operating fee is expected to increase 10% to oblige increased expenditures, according to Skiles. He spoke during the NCUA's Eighth Annual Budget Briefing and Public Forum held Thursday in Alexandria, Va.
The most significant NCUA program changes under consideration would add additional staff, implement a 12-month examination cycle, develop a national examiner team to conduct high-risk exams, and centralize credit union chartering in 2009.
NCUA said it believes it is "imperative to expand its examiner staff and develop a cadre of well-trained experts as credit unions are faced with unprecedented liquidity pressures, increased interest rate risk, due diligence efforts, concentration risk, and additional governmental requirements."
NCUA's proposed budget includes $12.8 million to hire and train:
100 additional examiners;
Five problem case officers;
Five risk management officers; and
Additional support staff.
Pay and benefits for the entire staff are projected to increase $14.5 million or 12.3%. Travel expense is expected to increase $6.9 million or 44.7% to accommodate a 12-month examination cycle and expected inflation pressures, said Skiles.
The NCUA Board is scheduled to consider the budget at its Nov. 20 meeting. Use the resource link below to access the NCUA budget briefing PowerPoint presentation.
courtesy of cuna.org
Friday, October 31, 2008
CUNA pushes for CU asset relief plan
WASHINGTON (10/31/08)—Although the need may be modest, credit unions should have their own credit union-funded troubled-asset relief program through their federal regulator, the Credit Union National Association (CUNA) proposed Thursday.
Testifying at the National Credit Union Administration's (NCUA's) eighth annual public budget briefing, CUNA reported that credit unions, despite the current economic upheavals, are generally in good shape with overall net worth around 10.5% of assets.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, and president/CEO of the Tennessee Credit Union League, tells the three-member NCUA Board that CUNA believes any potential capital deficiency among credit unions due to the financial meltdown is likely modest--given that overall credit union net worth is about 10.5%. (Photo provided by CUNA)
Still, a small number of credit unions have become "collateral damage to the collapse of housing prices in some markets." Those cooperatives should be able to seek assistance either through the U.S. Treasury Department's Troubled Asset Relief Program (TARP) or a similar plan administered by the NCUA just for credit unions. Currently the Treasury plan, authorized under the 2008 Emergency Economic Stability Act, does not include credit unions or other mutual institutions.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, testified on CUNA's behalf. Gaines is president/CEO of the Tennessee CU League.
Gaines also made the following points at the briefing:
CUNA continues to support full insurance coverage for noninterest bearing transaction accounts;
Credit unions are concerned about an insurance premium. The NCUA board should closely monitor this issue and provide credit unions as much advance notice as possible if a premium assessment is likely;
The NCUA may need additional staff to handle problems. CUNA does not oppose additional staffing, but requests the agency make no unnecessary additions; and
The NCUA has improved its handling of the overhead transfer rate issue, but CUNA maintains it is still unclear how insurance-related costs are distinguished from supervisory ones.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, and president/CEO of the Tennessee Credit Union League, chats with NCUA Board Member Gigi Hyland during a break in yesterday's NCUA Budget Briefing.
Gaines also noted that CUNA is currently completing a survey on regulatory examinations and share the results with the NCUA and the National Association of State CU Supervisors.
"We already know that credit unions are raising concerns about examiner pressure regarding return on assets (ROAs)," Gaines said Thursday. "NCUA should continue to provide training to examiners on communications and ensure board members' views are reflected in examiner actions."
He added that credit unions continue to seek more regulatory guidance on Bank Secrecy Act issues.
In concluding, Gaines acknowledged that the country's economic woes will make the coming year will difficult for credit unions and he said CUNA appreciates the regulators' efforts to "contain cost and reduce regulatory burden."
courtesy of cuna.org
Testifying at the National Credit Union Administration's (NCUA's) eighth annual public budget briefing, CUNA reported that credit unions, despite the current economic upheavals, are generally in good shape with overall net worth around 10.5% of assets.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, and president/CEO of the Tennessee Credit Union League, tells the three-member NCUA Board that CUNA believes any potential capital deficiency among credit unions due to the financial meltdown is likely modest--given that overall credit union net worth is about 10.5%. (Photo provided by CUNA)
Still, a small number of credit unions have become "collateral damage to the collapse of housing prices in some markets." Those cooperatives should be able to seek assistance either through the U.S. Treasury Department's Troubled Asset Relief Program (TARP) or a similar plan administered by the NCUA just for credit unions. Currently the Treasury plan, authorized under the 2008 Emergency Economic Stability Act, does not include credit unions or other mutual institutions.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, testified on CUNA's behalf. Gaines is president/CEO of the Tennessee CU League.
Gaines also made the following points at the briefing:
CUNA continues to support full insurance coverage for noninterest bearing transaction accounts;
Credit unions are concerned about an insurance premium. The NCUA board should closely monitor this issue and provide credit unions as much advance notice as possible if a premium assessment is likely;
The NCUA may need additional staff to handle problems. CUNA does not oppose additional staffing, but requests the agency make no unnecessary additions; and
The NCUA has improved its handling of the overhead transfer rate issue, but CUNA maintains it is still unclear how insurance-related costs are distinguished from supervisory ones.
Tom Gaines, chairman of the CUNA Examination and Supervision Subcommittee, and president/CEO of the Tennessee Credit Union League, chats with NCUA Board Member Gigi Hyland during a break in yesterday's NCUA Budget Briefing.
Gaines also noted that CUNA is currently completing a survey on regulatory examinations and share the results with the NCUA and the National Association of State CU Supervisors.
"We already know that credit unions are raising concerns about examiner pressure regarding return on assets (ROAs)," Gaines said Thursday. "NCUA should continue to provide training to examiners on communications and ensure board members' views are reflected in examiner actions."
He added that credit unions continue to seek more regulatory guidance on Bank Secrecy Act issues.
In concluding, Gaines acknowledged that the country's economic woes will make the coming year will difficult for credit unions and he said CUNA appreciates the regulators' efforts to "contain cost and reduce regulatory burden."
courtesy of cuna.org
Banks' fees at all-time highs, says new study
NEW YORK (10/31/08)--Banks are taking it on the chin in Bankrate.com's latest fees survey, which concludes fees for ATM surcharges, checking account fees and monthly service fees are at all-time highs.
Some fees have outpaced inflation, Bankrate.com told CNNMoney.com (Oct. 29). The 2008 Checking Study surveyed interest-bearing and noninterest-bearing accounts at 249 banks and thrifts in the largest 25 metro areas.
The study found:
ATM surcharges--the fee the ATM-owning bank charges to nonaccount holders--rose to $1.97, about 11% more than the $1.78 charged last year. The cost of using a foreign ATM was $1.46, up from last year's $1.25. That puts the total average cost of using an out-of-network ATM at $3.43 per transaction. Bounced-check fees rose 2.5% this year, to $28.95 per check.
In interest-bearing accounts, monthly service fees hit a new high of $11.97 on average. Minimum balance requirements also set a record with a minimum average of $3,461.84 required to keep an account at the bank open.
For noninterest-bearing accounts, the reverse was true. Monthly service fees for these accounts hit a new low--at $1.96 and their minimum balances were a low of $109.26 average balance required.
Online banks had higher average minimum requirements to open either an interest-bearing checking account or noninterest-bearing account than a brick-and-mortar bank. For interest-bearing accounts, online banks required an average $650.81, versus $376.75 at a traditional bank. For noninterest-bearing accounts, online banks required $133.33 while traditional banks required $82.71.
Credit union accounts are not included in the survey.
The news comes at a time when banks are doing everything they can to make up revenue gaps from market exposures and rising credit costs stemming from lending, said Forbes.com (Oct. 27).
Large banks are raising some account fees to record levels at a time when more consumers are struggling to pay bills, USA TODAY Oct. 30) noted.
courtesy of cuna.org
Some fees have outpaced inflation, Bankrate.com told CNNMoney.com (Oct. 29). The 2008 Checking Study surveyed interest-bearing and noninterest-bearing accounts at 249 banks and thrifts in the largest 25 metro areas.
The study found:
ATM surcharges--the fee the ATM-owning bank charges to nonaccount holders--rose to $1.97, about 11% more than the $1.78 charged last year. The cost of using a foreign ATM was $1.46, up from last year's $1.25. That puts the total average cost of using an out-of-network ATM at $3.43 per transaction. Bounced-check fees rose 2.5% this year, to $28.95 per check.
In interest-bearing accounts, monthly service fees hit a new high of $11.97 on average. Minimum balance requirements also set a record with a minimum average of $3,461.84 required to keep an account at the bank open.
For noninterest-bearing accounts, the reverse was true. Monthly service fees for these accounts hit a new low--at $1.96 and their minimum balances were a low of $109.26 average balance required.
Online banks had higher average minimum requirements to open either an interest-bearing checking account or noninterest-bearing account than a brick-and-mortar bank. For interest-bearing accounts, online banks required an average $650.81, versus $376.75 at a traditional bank. For noninterest-bearing accounts, online banks required $133.33 while traditional banks required $82.71.
Credit union accounts are not included in the survey.
The news comes at a time when banks are doing everything they can to make up revenue gaps from market exposures and rising credit costs stemming from lending, said Forbes.com (Oct. 27).
Large banks are raising some account fees to record levels at a time when more consumers are struggling to pay bills, USA TODAY Oct. 30) noted.
courtesy of cuna.org
September CU loans up, savings down
MADISON, Wis. (10/31/08)--Credit unions maintained a strong level of real estate lending in September, along with increased year-to-date loan growth compared with last year's pace. However, flagging consumer confidence and fears of a prolonged recession likely will result in weak consumer lending in the fourth quarter, said a Credit Union National Association (CUNA) economist.
Credit union loans outstanding increased 0.8% in September and 6.2% over the first nine months of 2008, compared with 4.9% during the same period last year, according to the CUNA monthly sample of credit unions.
Home equity loans led growth (2.5%), followed by adjustable-rate mortgages (2.2%), fixed-rate first mortgages (1.1%), used-auto loans (0.9%), unsecured personal loans (0.5%) and new-auto loans (0.4%).
Fixed-rate first mortgages and adjustable-rate mortgages had the highest year-to-date increases, 15.1% and 11.8%, respectively.
"Credit unions continued to do well in real estate lending during the month of September," Steve Rick, CUNA senior economist, told News Now. Fixed-rate first mortgage loan balances rose 1.1% in September and 3% for the third quarter. Year-to-date total loan growth came in at 6.2%, up from last year's 4.8% pace, Rick said.
"Falling consumer confidence and expectations of a deep and prolonged recession will keep consumer lending weak in the fourth quarter," he added. "However, with banks tightening their mortgage loan underwriting standards, credit union real estate lending will continue to dominate credit union loan portfolio growth."
Though credit union savings balances declined 0.9%, to $685 billion in September from $691 billion in August, they rose 5.1% for the first nine months of 2008.
Individual retirement accounts increased 1.5%, while share drafts (7.3%), money market accounts (0.6%), regular shares (0.3%), and one-year certificates (0.4%) declined.
With loan growth increasing and savings growth decreasing, the loan-to-savings ratio increased to 84.3% in September from 83% in August.
The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased to 14.6% from 15.5% in August.
Credit unions' 60-plus-day delinquencies increased slightly to 1.1% from 1% in August.
The movement's overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion.
"The Bureau of Economic Analysis reported economic growth of negative 0.3% in the third quarter," Rick said. "Consumer spending fell 3.1% on a seasonally adjusted annual rate." Spending on durable goods--furniture, appliances, autos--fell by 14.1%.
Credit union new-auto and credit card lending reflected the spending slowdown. Credit card balances rose only 2.3% in the third quarter, down from last year's third-quarter pace of 4.7%. New auto loans rose 0.5% versus last year's third-quarter pace of 1%, Rick added.
courtesy of cuna.org
Credit union loans outstanding increased 0.8% in September and 6.2% over the first nine months of 2008, compared with 4.9% during the same period last year, according to the CUNA monthly sample of credit unions.
Home equity loans led growth (2.5%), followed by adjustable-rate mortgages (2.2%), fixed-rate first mortgages (1.1%), used-auto loans (0.9%), unsecured personal loans (0.5%) and new-auto loans (0.4%).
Fixed-rate first mortgages and adjustable-rate mortgages had the highest year-to-date increases, 15.1% and 11.8%, respectively.
"Credit unions continued to do well in real estate lending during the month of September," Steve Rick, CUNA senior economist, told News Now. Fixed-rate first mortgage loan balances rose 1.1% in September and 3% for the third quarter. Year-to-date total loan growth came in at 6.2%, up from last year's 4.8% pace, Rick said.
"Falling consumer confidence and expectations of a deep and prolonged recession will keep consumer lending weak in the fourth quarter," he added. "However, with banks tightening their mortgage loan underwriting standards, credit union real estate lending will continue to dominate credit union loan portfolio growth."
Though credit union savings balances declined 0.9%, to $685 billion in September from $691 billion in August, they rose 5.1% for the first nine months of 2008.
Individual retirement accounts increased 1.5%, while share drafts (7.3%), money market accounts (0.6%), regular shares (0.3%), and one-year certificates (0.4%) declined.
With loan growth increasing and savings growth decreasing, the loan-to-savings ratio increased to 84.3% in September from 83% in August.
The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased to 14.6% from 15.5% in August.
Credit unions' 60-plus-day delinquencies increased slightly to 1.1% from 1% in August.
The movement's overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion.
"The Bureau of Economic Analysis reported economic growth of negative 0.3% in the third quarter," Rick said. "Consumer spending fell 3.1% on a seasonally adjusted annual rate." Spending on durable goods--furniture, appliances, autos--fell by 14.1%.
Credit union new-auto and credit card lending reflected the spending slowdown. Credit card balances rose only 2.3% in the third quarter, down from last year's third-quarter pace of 4.7%. New auto loans rose 0.5% versus last year's third-quarter pace of 1%, Rick added.
courtesy of cuna.org
Recession severity depends on credit markets, says Hampel
PLANO, Texas (10/31/08)--Like a Halloween horror story where tension mounts, the worst of an economic recession in the U.S. is still to come, Credit Union National Association Chief Economist Bill Hampel told the Southwest Corporate FCU's 31st annual Economic Forum this week in Dallas.
"If credit markets remain tight, we're likely to have a severe recession like the early 1980s. If credit markets ease within a month, the recession will be milder--like 1990 or 2001--but we'll have a slow recovery," Hampel said.
"However, this is not a depression like the 1930s," he continued. "Wall Street is in much worse condition than Main Street."
But the huge contraction in consumer wealth that has occurred over the past two years will take time to reverse, he said. The ratio of household debt outstanding to annual disposable income was 125% for the first quarter of 2008. Until households start saving again, the economy will remain weak, and a "significant increase" in credit union loan delinquencies and losses will offset improving interest-rate spreads.
Hampel urged credit unions not to panic. "Let your capital cushion do its work. Credit unions have high capital in the 11% range now. Avoid penalizing your members with higher fees and loan rates and lower dividend rates just to protect your return on assets. Even if net income drops to 9%, we're still a well-capitalized industry."
Hampel projected both loan and share growth at 8% for credit unions in 2009. Other forecasts included a consumer price index of 2.5 over the next 12 months and an unemployment rate of 8% by late next year.
Nearly 500 attended the two-day Economic Forum and pre-Forum Member Business Services and Financial Management Seminars, said Southwest Corporate.
courtesy of cuna.org
"If credit markets remain tight, we're likely to have a severe recession like the early 1980s. If credit markets ease within a month, the recession will be milder--like 1990 or 2001--but we'll have a slow recovery," Hampel said.
"However, this is not a depression like the 1930s," he continued. "Wall Street is in much worse condition than Main Street."
But the huge contraction in consumer wealth that has occurred over the past two years will take time to reverse, he said. The ratio of household debt outstanding to annual disposable income was 125% for the first quarter of 2008. Until households start saving again, the economy will remain weak, and a "significant increase" in credit union loan delinquencies and losses will offset improving interest-rate spreads.
Hampel urged credit unions not to panic. "Let your capital cushion do its work. Credit unions have high capital in the 11% range now. Avoid penalizing your members with higher fees and loan rates and lower dividend rates just to protect your return on assets. Even if net income drops to 9%, we're still a well-capitalized industry."
Hampel projected both loan and share growth at 8% for credit unions in 2009. Other forecasts included a consumer price index of 2.5 over the next 12 months and an unemployment rate of 8% by late next year.
Nearly 500 attended the two-day Economic Forum and pre-Forum Member Business Services and Financial Management Seminars, said Southwest Corporate.
courtesy of cuna.org
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