State-By-State Coverage Of Asset Quality Trends

FirstLook data shows regional changes in delinquency, charge-offs, and coverage ratios.


Credit unions improved their asset quality in the second quarter but also remained diligent in reserving against future losses. According to FirstLook data in Callahan & Associates’ Peer-to-Peer software, industry delinquency and net charges-offs declined for the second quarter in a row. Delinquency dropped another three basis points to 1.73% at the end of June; net charge-offs declined two basis points to 1.16%. 

Delinquency & Charge-Offs

At the same time, the coverage ratio, or the measure of the allowance account to total reportable delinquency, increased. It is up 352 basis points since March 30 and up an incredible 972 basis points since year end. As of June 30, the industry’s coverage ratio stands at 93.74%, meaning the industry has collectively reserved enough to cover almost 94 cents on the dollar for every loan currently delinquent. 

Coverage Ratio

But this recession has not affected all regions of the country to the same degree. How are credit unions faring in different areas of the United States? Download a table showing the same three data points discussed above for all 50 states and the District of Columbia. See the snapshot below.

Download the full table
Coverage Ratio by State

In summary, 12 states, including California and Nevada, have a coverage ratio of greater than 100% at June 30 and 44 states and the District of Columbia increased their coverage ratio since year-end 2009. Delinquency fell in 37 states and DC, and the net charge-off ratio declined in 33 states. 

As the economy continues to improve, credit unions might start to reassess their provision expense. Large banks including JP Morgan and Bank of America are already releasing billions of dollars from their allowance account. Is it time for credit unions to step down their provision expense?




Aug. 23, 2010


  • The allowance to delinquency coverage ratio is less meaningful for those CUs whose delinquency is made up of a significant amount of 1st mortgages (because of the level of collateral).

    I would like to see more industry data on a charge off coverage ratio (current allowance versus preceeding 12 months charge offs).


    Mike Welte

    Mike Welte