Credit unions show steady growth.The total assets of U.S. credit unions are rising, according to midyear financial information released by the National Credit Union Administration The National Credit Union Administration (NCUA) is responsible for chartering, insuring, supervising, and examining federal credit unions (FCUs) and for administering the National Credit Union Share Insurance Fund. (NCUA NCUA National Credit Union Administration (US government) NCUA Nbcs Control Unit Atm ) in Washington, D.C. The NCUA findings regarding the 12,332 state and federally chartered credit unions were reported by Veribanc, Inc., a Wakefield, Massachusetts, research firm. Most measures of the industry's health showed a steady improvement, as indicated in the table on page 22. As of June 1994, assets were $296.8 billion, a 7.6% increase from June 1993 and a 28% increase from the midyear-1991 figure of $231.8 billion. Veribanc found that credit unions had accumulated almost $27 billion of equity, more than 9% of their total assets. The situation isn't all rosy, the report showed. Although the 1993 figures indicated a 1.42% return on assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). during the first six months, in the comparable period in 1994 there was a 12% drop in dollar earnings. Also, the number of unprofitable credit unions reported rose 10.7%. Credit unions held $55.6 billion in mortgages in mid-1994, a 7.1% increase from 1993 and a 14.4% increase from 1991. According to Veribanc, a number of institutions had 90% or more of their loans in mortgages. Credit unions also had $17.8 billion in derivatives, including collateralized mortgage obligations Collateralized mortgage obligation (CMO) A security backed by a pool of pass-through rates , structured so that there are several classes of bondholders with varying maturities, called tranches. , real estate mortgage investment conduits Real Estate Mortgage Investment Conduit (REMIC) A pass-through tax entity that can hold mortgages secured by any type of real property and can issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. , stripped mortgage securities and residual obligation instruments. They also were beginning to use interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. , the report added. For more information, contact Warren Heller, research director, Veribanc, Inc., at (617) 245-1226, ext. 202. |
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