Four graphs explore differences in asset quality by region of the country.
Understanding how well you are handling delinquency starts from an understanding of how your rates compare to others. While the recession and real estate bubble are a national phenomena, the extent of impact varies significantly by region. Below, we take a look at asset quality in five regions: the Sand States, Southeast, West, Northeast, and Midwest (a legend is at the bottom).
This data spread is an excerpt from the soon-to-be-released 4Q2009 edition of Credit Union Strategy and Performance. It is just one of several pages covering asset quality, the forecast for the U.S. economy (by Goldman Sachs), and lessons for the allowance for loan losses (by Mike Sacher) For additional details on the peer groups and their performance over the past two years subscribe to CUSP now.
Total Reportable Delinquency
While the Sand States started 2007 with the lowest reportable delinquency, the rate rose quickly. Since mid-year 2008, the delinquency rate has continued to rise well above other geographic areas due to a combination of factors.
Total First Mortgage Delinquency
Credit unions in the Midwest had higher than average first mortgage delinquency, possibly due to years of slower manufacturing activity and job growth. As a result, they know how to handle member delinquency. Their first mortgage delinquency ratio, while higher than the Southeast and Northeast, hasn't risen as much in absolute amounts.
Total Other RE Delinquency
With the collapse in home prices, credit unions that held second mortgages suffered. Members are more likely to pay lenders who hold the primary mortgage on the house in order to maintain residency. While volatile, other real estate delinquency isn't increasing as fast as early 2009.
Total MBL Delinquency
Credit unions in the West have the highest Member Business Lending (MBL) delinquency numbers, reaching over 6.8% at year-end. Credit unions in the Western states have higher amounts of construction and development loans compared to their peers. The industry delinquency ratio for these types of loans is 13.8%.