Six months after the Katrina hurricane – the costliest hurricane in recorded US history – Louisiana’s credit unions are battling a rising tide of delinquencies.
The first quarter 2006 data shows a dramatic growth in delinquencies for Louisiana’s credit unions from a year ago. The 12 month delinquency growth rate stood at 59.5 percent compared to the national average growth of -7.9 percent as of March. So while delinquencies have declined, even in the face of rising interest rates nationally, Louisiana’s has soared. Further, the growth rate is a full 18.5 percentage points higher than the next highest state, New Mexico, where delinquencies grew 31 percent.
12 Month Delinquency Growth
However, the worst may be coming to an end for many of them as the quarterly delinquency rate fell to 1.28 percent at the end of the first quarter, the same as last March. While nearly twice the national credit union delinquency average, this return to stability is a welcome sign.
Even better, aid money flowing in for the rebuilding and reconstruction efforts seems to be finding its way to credit union balance sheets. At 14.9 percent, Louisiana’s 12-month share growth is second only to Mississippi’s 22.3 percent, another Katrina-hit state. Such strong share growth comes at a time when slow share growth remains the number one concern of many credit union CEOs.
12 Month Share Growth
With residents returning to the area and rebuilding efforts continuing, delinquency rates are only likely to improve in the Cajun state.
Providing flexibility for loans repayments to members at this time will distinguish credit unions from other competitors as members will likely remember their credit union standing by them in a time of need. Now is the time to showcase the strength of the cooperative model behind the credit union movement.