The nation's credit unions are better capitalized and have fewer delinquencies than U.S. banks, Callahan & Associates reported on Tuesday.
Credit unions had an overall delinquency rate of 0.71% based on reports filed with the NCUA for the first quarter of 2016. That is 87 basis points lower than the 1.58% banks reported to the FDIC for the same period.
Callahan analysts said the figures show more robust underwriting at credit unions and that credit unions are able to work with members whose loans are past due.
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"Credit unions aren't only helping members get a loan, they're making sure the loan is the right fit for their income and lifestyle, which is helping keep down the number of loans that go delinquent," Sam Taft, Callahan director of industry analysis said.
Credit unions also are better capitalized than banks, Callahan said. Using its peer-to-peer software, the company reported that the credit union's net worth ratio stood at 10.8% as opposed to 9.6% at banks.
In addition, Callahan said, the credit union coverage ratio—allowance for loan and lease losses divided by delinquent loan balances—is now 130.4%, compared to the banking industry ratio of 85.5%.
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