Credit Unions Still Plagued by Troubled Mortgages

State credit union regulators said the second quarter saw a continued increase in loan delinquencies and loan losses, most of it concentrated in mortgage loans, and of troubled institutions among California's credit unions. The delinquency ratio for all California credit unions topped 2% at midyear, with state charters particularly hard-hit at over 2.2%, William Haraf, commissioner of the state's Department of Financial Institutions, told the California CU League. That compares to a delinquency ratio of 1.58% for all credit unions nationwide at midyear. Loan defaults surged by 12% during the second quarter to more than $1 billion, while the charge-off ratio rose to almost 2%. Delinquencies among real estate loans continued to rise even faster, by 27% in the second quarter to $680 million. Delinquencies for member business loans also spiked in the second quarter to 1.78%, from 1.23% in the first quarter, the DFI commissioner reported. In addition, the number of problem credit unions, those rated CAMEL 3, 4 or 5, rose to 53, from 41 at the end of the first quarter, even as several troubled institutions, like American River HealthPro CU, E1 Financial CU and Community Trust CU, were merged out.