Here's a related article with detailed insight into Pentagon Federal Credit Union, one of the 5 largest credit unions in the U.S. and primarily serves current and retired members of the military...
Here's a related article with detailed insight into Pentagon Federal Credit Union, one of the 5 largest credit unions in the U.S. and primarily serves current and retired members of the military and select parts of the US government. They make some notable comments on the health of the economy and federal credit unions as well.
While unemployment is near record lows and unemployment is subsiding, [President/CEO] Schenck said many borrowers are still having financial difficulty.
“Pay increases have not kept up with increases in housing, energy and car ownership costs during the past three years. The average American consumer is worse off. The one tailwind is unemployment,” he said. “That is why PenFed is being proactive in building capital, reserves and liquidity to be able to weather any headwinds.”
Interestingly, Pentagon Federal's credit union peers (including the much larger Navy Federal) haven't written down a quarterly loss, while they have in Q4.
There's an article here with a broader view of credit unions' incomes and impacts of fewer loan originations (mortgages, car loans, commercial loans, etc).
From the abstract: But luckily, depositors didn't notice: That is, the losses can be made up by borrowing at a lower rate and lending at a higher rate, provided that depositors don't go elsewhere...
From the abstract:
We estimate that after realizing losses from assets that have decreased in value and not yet been sold the overall net worth of the credit union industry would have fallen by 40 percent in 2023:Q1. Unrealized losses were most severe at the largest credit unions.
But luckily, depositors didn't notice:
Nonetheless, the bulk of deposits at credit unions were insured, suggesting limited risk of an SVB-style run. In addition, credit union deposit rates are relatively insensitive to market interest rates, providing credit unions with a hedge against a rising rate environment. Overall, credit unions’ balance sheet positions seemed to be more resilient to unrealized interest rate risk than banks’.
That is, the losses can be made up by borrowing at a lower rate and lending at a higher rate, provided that depositors don't go elsewhere in search of competitive rates. (And the real estate loans are still good, etc.)
Also see table 4, where they estimate that in Q1 2023, 15 credit unions were insolvent, 80 critically undercapitalized, and 341 significantly undercapitalized.
Here's a related article with detailed insight into Pentagon Federal Credit Union, one of the 5 largest credit unions in the U.S. and primarily serves current and retired members of the military and select parts of the US government. They make some notable comments on the health of the economy and federal credit unions as well.
Interestingly, Pentagon Federal's credit union peers (including the much larger Navy Federal) haven't written down a quarterly loss, while they have in Q4.
There's an article here with a broader view of credit unions' incomes and impacts of fewer loan originations (mortgages, car loans, commercial loans, etc).
From the abstract:
But luckily, depositors didn't notice:
That is, the losses can be made up by borrowing at a lower rate and lending at a higher rate, provided that depositors don't go elsewhere in search of competitive rates. (And the real estate loans are still good, etc.)
Also see table 4, where they estimate that in Q1 2023, 15 credit unions were insolvent, 80 critically undercapitalized, and 341 significantly undercapitalized.