Rod Morrison

The NCUA approved 46 mergers during the second quarter of 2024, up from the 26 consolidations that received the green light to consolidate during the first quarter and 36 approved mergers during last year’s second quarter. #creditunions #bankingindustry #financialservices #fintech #mortgagelending #managementconsulting #money #future

5

NCUA just issued its Q2 Credit Union Data Summary. Per Chair Harper: “The credit union system overall remains largely stable in its performance and is relatively resilient against potential economic disruptions. However, challenges persist across the system and at specific institutions,” Chairman Todd M. Harper said. “Notably, an increasing segment of credit union membership continues to experience financial strain as evidenced by a steady increase in the loan delinquency rate, charge offs, and borrowing using the NCUA’s payday alternative loan product. While interest rate and liquidity risks have ebbed recently, we are seeing growing signs of concern in loan performance, capital, and earnings as deposit levels have dropped. Credit union managers must continue to monitor their institution’s performance and balance sheets and act expeditiously to prevent small anomalies from growing into big problems.” The referenced financial strain can be seen in these stats in particular: 1. Delinquency rate increase: Delinquency rose to 0.84 , up 21 basis points from a year earlier. 2. Net charge-offs increase: The net charge-off ratio increased to 0.79% in Q2, up 26 basis points from Q2 2023. This substantial rise in loan losses is impacting some credit unions' profitability and capital positions. 3. Declining ROA: The ROA decreased to 0.69% in Q2 2024, down from 0.80% in Q2 2023. 4. Rapid share certificate growth: Share certificate accounts grew by 30.6% over the year, reaching $528.2 billion. This growth is a "return to the mean". 5. Commercial loan delinquency rate spike: The commercial loan delinquency rate rose to 0.94% in Q2 2024, up 52 basis points from a year earlier. This sharp increase indicate increasing stress in credit unions' commercial lending portfolios. 6. Credit card delinquency rate increase: The credit card delinquency rate rose to 1.98% in Q2 2024, up 44 basis points from a year earlier. This could be an early indicator of broader consumer financial stress. 7. Provision for loan and lease losses increase: This expense increased by 41.4% over the year to $13.0 billion at an annual rate in the first half of 2024. The significant rise suggests credit unions are anticipating higher future loan losses - and is likely also linked to ramifications of CECL. 8. Slower asset and deposit growth: Total assets grew by only 3.5% and total deposits by 2.6% over the year, which is slower than historical averages. When deposit growth is less than cost of funds - its really a decline...

1

For the first time, RDFIs will have a defined role in monitoring ACH payments they receive. This significant development, approved by Nacha members, aims to combat fraud, including business email compromise (BEC), associated with credit-push payments. As Jane Larimer, Nacha President and CEO, points out, "All participants in the ACH Network have a part to play in reducing the incidence of fraud and recovering when fraud has occurred." Learn more in our April 2024 Innovating Payments Executive Summary— Nacha Rules Take Aim at Credit-Push Fraud: https://lnkd.in/ezsgudgX. Plan to join Sean Carter, AAP, APRP, Mark J. Dixon, CTP, AAP, APRP, NCP, Mary Morrison, AAP, APRP, NCP, CAMS, and Patty Presta for a comprehensive two-part series, "Diving Into the Operation Impact of the New ACH Rules," on May 31 and June 07, 2024, where they will delve into the implications of these new rules, offering insights on implementation, procedures, policy updates, audits, risk assessments, and organizational engagement. 🔍 Curious about engaging with third-party providers? 📝 Wondering about new procedures and policy updates? 🤔 Unsure about ACH audits or risk assessments? Get the answers by registering for Diving Into the Operation Impact of the New ACH Rules: https://lnkd.in/e7y73DN2 #ACH #FinancialServices #FraudPrevention #RegulatoryCompliance #ProfessionalDevelopment

20