Credit unions, after growing liquidity for two straight years,
are focusing their efforts on growing their loan portfolio. However,
while growing loans is important, it is equally important to not
lose sight of maintaining quality loans on the books. In 2002 credit
unions lost $1.5 billion in loans due to bankruptcy, a record for
the industry. That $1.5 billion was 0.44% of total loan balances,
the highest level since 1997.
The table below lists the leading and trailing five states based
on bankrupt loans as a percentage of total loan balances. The top
five states all seem to have similarly strong concentrations of
real estate loans in their portfolio, ranging from 50% to over 65%.
Conversely, the five states with the highest level of bankruptcy
have far less of a percentage of their loans in real estate, those
states range from 22% to 41%.
Instead, the states with the highest bankruptcy levels seem to
have a much greater portion of their loans in auto loans. Ironically,
these states have a much higher average bankrupt loan, even though
their loan portfolio favors less high-ticket real estate loans.
Unfortunately, it also appears that these five states all have high
delinquency ratios, indicating that there bankruptcy woes may be
far from over.