The coverage ratio, which compares the balance of the allowance account to total reportable delinquent loan balances, is a good measure of how well credit unions are reserved for potential losses. The coverage ratio for the industry as a whole stands at 119%, meaning the industry has collectively reserved more than dollar-for-dollar on every loan currently delinquent.
At September 30, 2012, Arizona had a coverage ratio of 285% compared to just 118% one year ago. A substantial portion of this change may be attributable to the change in troubled debt restructure (TDR) accounting. Now that TDRs no longer need to be reported as delinquent for the first 6 months in repayment, the total delinquent loan balances in Arizona fell from over $264 million one year ago to just under $62 million at September 30. The allowance account also fell from $312 million to $175 million, just at a much slower rate than the delinquent loan balances, driving up the coverage ratio.
Hover over each state on the map below to see its coverage ratio.
COVERAGE RATIO BY STATE | DATA AS OF SEPTEMBER 30, 2012
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