NCUA Update Alaska Credit Union League

1. NCUA UpdateAlaska Credit Union League NCUA Board Member Christiane Gigi Hyland April 30, 2010

2. ECONOMY

3. Unemployment “It all boils down to jobs at this point” Mark Zandi, chief economist and co-founder of Moody’s Economy.com Source: Bureau of Labor Statistics

4. Housing Market 2008Q3 to 2009Q3, % change in average price of existing single-family homes NH -3.1 VT 2.2 -8.7 MA -1.5 -3.6 0.1 -2.7 -4.2 -8.8 U.S. = -3.8% RD -3.0 -8.7 -0.5 -2.3 --4.2 -2.8 -4.7 1.3 2.6 -2.3 CT -4.6 -24.5 -2.0 -4.1 -10.5 -2.2 NJ -4.9 0.0 -0.7 -7.7 1.6 -1.0 -3.7 -2.1 DE -4.7 -1.4 -17.1 -2.2 1.3 -2.5 -0.7 -5.4 MD -5.4 -3.3 0.0 0.3 -2.4 DC -0.9 -7.6 -0.9 -2.8 -13.4 0% to 5% -30% to -10% -9.9% to -5% -4.9% to-0.1% Source: Federal Housing Finance Agency

5. Foreclosures Continue to Rise #of properties with foreclosure filing, % change 2008-2009 NH 8.7 35.3 VT 4.4 10.2 5.1 11.5 MA -18.5 56.2 89.6 101.6 79 90.3 0.7 11.5 RD -23.1 5.9 5.5 20.2 CT -10.2 44.3 -42.2 31.8 -10.5 82.9 -9.9 116 NJ 1.1 20.8 0.2 45.6 -8.8 6.4 33.7 DE 20.6 -16.1 -7.8 39.6 3.8 15.9 MD 33.7 93.5 67.8 156 24.5 136 DC -22.6 4.0 182.6 64.8 25.5 34.1 U.S. average: 21.2% Increase Decline *Some increases may be overstated due to data collection changes or improvements Source: RealtyTrac.com

6. Households are Under Stress % of number of all mortgage loans 30+ days delinquent, 2009Q3 NH 8.5 6.9 VT 5.5 5.2 3.9 8.7 6.8 MA 9.0 6.5 7.8 7.2 4.3 8.5 12.2 5.3 RD 9.9 13.8 6.6 8.9 6.2 CT 8.4 10.3 10 8.2 11.2 10.4 6.6 10.1 NJ 8.9 7.2 9.1 7.4 9.3 9.4 DE 8.4 10.8 11.6 8.0 9.6 7.6 8.6 MD 9.7 10.7 12.5 13.6 DC 7.2 9.3 10.1 6.6 11.8 5.1 U.S. average: 9.6% Comparing to national average: -worse, -at or near -better Source: Mortgage Bankers Association

7. Commercial RE Sales Price Trends Based on level of commercial transactions in 2009Q3, Y/Y price change NH: -20 -27 VT: -15 -23 -10 0 -22 MA: –26 -29 -23 -18 -30 -39 -17 -10 RD: -23 -33 -21 -20 CT: -17 -32 -25 -18 -21 -21 -23 -19 -14 NJ: -13 -18 -23 -15 -20 DE: -18 -24 -24 -14 -36 -25 -20 -21 MD: -26 -13 -23 -23 DC: -17 -24 -8 -19 N/A -26 -37% – -30% -29% – -20% -19% – -10% -9% - 0% Source: National Association of Realtors

8. Credit Union Trends

9. Net Worth Ratio • Includes adjustments made after NCUSIF stabilization expense was announced.

10. Net Worth Ratio Alaska FICUs vs. All FICUs Trends • Includes adjustments made after NCUSIF stabilization expense was announced.

11. Supplemental Capital • Launched an initiative in December 2008 after conversations with state regulators. • Internal working group at NCUA researching and reviewing a variety of issues around supplemental capital including consumer protection, mutuality and safety and soundness. • Issued White Paper on April 12th. Available at NCUA’s web site.

12. Return on Average Assets (ROA) *2008 ROA after NCUSIF stabilization expense estimated base on 5300 changes after the announcement

13. Return on Average Assets (ROA)

14. Delinquency & Charge-Offs

15. Delinquency Comparison

16. Charge-Off Comparison

17. Delinquency by Type

18. 10 Year Comparison - FICUs

19. Share Composition

20. Changing Balance Sheet *Net Income without stabilization Income or expense

21. Concentration Risk

22. NCUSIF

23. Number of Credit Union FailuresFY 00 – FY 09

24. NCUSIF Charges, Provision for Loss Expenses and Reserves

25. History of Charges to NCUSIF Reserves Recession July 1990-March 1991 Recession July 1981-Nov 1982

26. Regulatory Issues

27. Current Regulatory Issues • Proposed Corporate Credit Union rule • Received over 800 comment letters • Next step is to sort through them, discuss and refine the proposal. • Corporate “Troubled Assets” • The proposed rule contemplates that there will be no legacy assets. • NCUA is working closely with Treasury to find a mechanism to deal with the troubled bonds.

28. Current Regulatory Issues • Proposed Field of Membership changes • Affects community charters and rural areas • Comment letters were due April 15th (extended from March 1st) • Proposal would • Define what constitutes a local community based on objective, quantifiable criteria; • Define the term “rural district”; • Define the term “in danger of insolvency” for emergency merger purposes; and • Clarify marketing plan requirements for credit unions converting to or expanding their community charter.

29. Current Regulatory Issues • Proposed changes to RegFlex • Remove the exemption from the fixed assets rule; • Remove the exemption from required stress testing of portfolios; • Remove the exemption requiring a personal guarantee on MBLs; and • Remove the exemption of discretionary control of investments. • Out for a 60 day comment period.

30. Current Regulatory Issues • Just issued a proposed small dollar loan rule for a 60 day comment period • The proposal would amend the general lending rule to allow credit unions to charge a higher interest rate (28%) for closed-end small dollar loans (i.e., $200-$1,000). • The proposal would also: • Allow credit unions to charge a flat $20 application fee for such loans; • Require a minimum maturity term of one month and a maximum maturity term of six months; • Limit FCUs from making more than three, STS loans in any rolling six-month period to any one borrower and making no more than one, short-term, small amount loan at a time to a borrower; • Prohibit FCUs from rolling-over any STS loan; • Require FCUs to include in their written lending policies, a limit on the aggregate number of loans and aggregate dollar amount of loans made under this section and implements appropriate underwriting guidelines to minimize risk; for example, requiring a borrower to verify employment by producing at least two recent pay stubs.

31. Opportunities for Credit Unions • Reach out to everyone in the FOM • Ensure the board, management and staff are as diverse (in age and ethnicity) as your credit union • Educate, educate, educate • Member business loans • Small dollar loans

32. Questions?