Hey everyone, this is Mark Treichel with another episode of With Flying Colors. I hope your summer is going well. It's finally cooled off a little bit across the country and that's a good thing. This is going to be a catch up call, if you will. I'm going to update you on some things coming down the road.
I'm also going to talk about just listen to Callahan's. Quarterly, whatever they call it, Callahan's quarterly state of the industry, and I had a couple of takeaways from that data. That's always an interesting thing to take a look at from a first blush of what's going on quarterly and credit unions.
All right, so what's coming up with with flying colors? Later this month, I have an episode coming out on field of memberships and new charters. And my guest on that will be Keith Stone of the finest federal credit union, and also an organizer and CEO of the New Jersey PBA federal credit union. I'll be joined on that with Rick Mumm, a former colleague of mine at NCUA who also does consulting on field membership and also with me with my clients.
But anyway, that's coming up. We'll talk about the new charter process and how they were able to achieve the fastest new charter being approved in what we believe is the history of NCOA. At least going back to when they gave them out a dime a dozen back in the 60s. So in the last 40 years, let's say the quickest, but that's coming up at the end of August.
Then in September, I have an episode on your called something like you're a code three. Now what followed by another episode called you're a code for now what we're seeing more code four is by the way, I'm very curious to see what the next quarterly round of data will show. I believe it'll show code threes are up.
And for the first time, perhaps a material increase in code for assets. We also have an episode coming up. With the concept of NCOA is asking to meet with the credit unions board without staff present. Yes, indeed. That's happening far more frequently than I can ever recall at my times during NCOA.
And I'll be discussing that. Those three podcasts I just mentioned, I'll be joined by members of my team, Steve Farr and Todd Miller. And you can expect to hear those episodes in September on Mondays. Other than Labor Day I'll probably put that one out on a Tuesday, but so that's coming down the pike.
I've also, I'm going to be on a webinar coming up with the trade association and I'm going to be a guest on a couple other podcasts. And when that happens, I will alert you here. And of course on LinkedIn and perhaps on email, if you subscribe to my podcast. Email list. If you don't, I suggest that you ask that you get added by going to my website, marktreichel.com or reaching out to me on LinkedIn. It's hard to believe that with all the years in place now of doing the podcast this is the third calendar year. So by the end of the year, we'll have completed three years. We have 192 episodes live. With flying colors. And some of you are aware, I have a related podcast called Credit Union Regulatory Exams where it's an audio book style podcast.
It's AI driven in that it'll be, for example, NCUA's priority letter. The AI part of it is it's an AI voice that I have coined Samantha shares as in a hat tip to the shares of credit union. And 99 percent of the time, you can't really even tell that she's AI. Occasionally you can, and I'm sure if you do listen, you'll pick that up.
But if you like audio books and you want to study some of the NCUA. FDIC, OCC, other guidance out there. That's a good way to do it, whether you like to do it when you're working out walking or what have you. So if you haven't checked that out, I encourage you to check that out. But 46 episodes of that.
So what's 46, 192 238 episodes combined of the two shows. So far and moving forward, we will if you subscribe you likely know that the With Flying Colors comes out on Monday FYI, Credit Union Regulatory Exam podcast typically comes out on Tuesday. And with the volume of podcasts that we have done now, there are several that are structured in a way that it's what I would call an evergreen topic.
Evergreen meaning it always has relevance. Moving forward starting in September, actually this week, this past Monday, we issued an evergreen topic on 10 reasons why you, why NCUA should not regulate why NCUA should not regulate. 10 reasons why NCOA should not regulate succession planning.
And we are going to have coming in September without calling it a throwback Thursday on Thursdays, we will be issuing our evergreen podcasts topics. Some of them will be on fair landing. Some of them will be a commercial landing. But there's quite a big arsenal of those that we've built up over these three years, and we will have one of those coming out in September.
More often than not every Thursday morning. So you'll have With Flying Colors on Monday, you'll have the Credit Union Regulatory Guidance Podcast on Tuesday, followed by With Flying Colors again on Thursday and again, those will be the evergreen topics on Thursday. All right. So I listened to Callahan talking about the data for this most recent quarter.
And I'm going to flip to that. Real quick here. The numbers are generally I would say the numbers that they reported for the industry are better in the second quarter. Some things that caught my ear were that profitability was marginally better. Charge offs were flat. Net interest margin had improved a little bit.
I'm curious about this. They indicated that more credit unions are hedging. I would say historically, not enough credit unions have taken advantage of that. Maybe because rates have gone up so much. It's been an aha moment for the industry. But this was ALM first that was doing this portion of their discussion and they indicated they have a lot more credit unions.
Pursuing that product. I think that's a fabulous thing. And as a reminder, if you want to be in hedging, you need to, it's easier to do it when you're a code one or a code two, then if you're not a code one or a code two, cause then you need to get NCWA's approval and by then it can be painstakingly long to get that approval.
You're better off again, doing it if you're a code one or code two. That, that would be my thought on that. Down to about 4, 600 credit unions, total assets, the 2. 3 billion. Interestingly, they showed and mentioned that loan growth had slowed to less than 4% over the last 12 months. And that had been over 12%.
The last 12 months. So from June to June of 24 to June of 23, compared to June of 23 to June of 22. All right. The other takeaway was that share growth. Had improved. The previous 12 months, the chair growth was 1. 2 percent over the last 12 month period. It was 12 2. 7%. They're also very cautious to differentiate between the mean and the median.
Of course, the mean is the average. The median is the middle most number. So if you're looking at 4600 credit unions, The median would be 2, 301 and the interesting part on that and probably the biggest takeaway from this was that while share growth on the average was 2. 7%. The median. So the middle most credit union.
Shrunk 1. 22%. And the middlemost credit union, they said the asset size of that was 59 million. By the way, the average credit union in assets is 500 million. Again they mentioned that 25 percent of the assets Of the industry we're in credit unions over 10 billion and that's only 21 credit unions So that's where the mean and the median can play havoc with these numbers But the big takeaway for me was that the median credit union meaning half of credit unions had at least a decline in shares of 1.
22%.
And of course, one thing that gets lost in having growth at 2. 7 percent as the mean if you're not growing as much as you're paying your members. So let's say. And I don't have this number here in front of me. They didn't mention what the cost of funds was or the cost of shares. But let's say the industry grew at 2.7 percent over the last year. If the cost of funds was 2. 6%, that means share basically grew 10 basis points. If the cost of funds was 3. 5%, that means you actually shrunk dollar for dollar because you're basically not even retaining the dividends you're paying to your members. That's something I'm going to dig into.
I haven't had a time to go look at the numbers and see what the actual share cost was. They didn't have it on one of their slides, but it's something I'm going to take a look at. Certificate growth is at 31%. Unrealized losses have come down from in the industry in totality from an 41 billion unrealized loss to 30 billion.
So what's that a decrease the 25 percent with rates likely according to all the to rates being down here shortly, that number should continue to get better. Another takeaway was borrowings had decreased a year over year from 6 percent to 5. 3 percent and cash reserves were being built up to about a 2%.
They talked about real estate loans. Only being down slightly. Consumer loans were down 15%. Credit card loans were up 7%. HELOCs were up 20 percent and commercial loans were up 10%. A lot of discussion about most of these numbers look potentially alarming. However, when you compare to pre pandemic, they're really not that bad.
But, the proof will be in the pudding to see what happens. Do we have a soft landing? Do we have a hard landing? Where does the election take us? Et cetera, et cetera. I'm looking forward to see what happens in code threes and code four. As I mentioned, we've got podcasts coming on out on the ramifications of those slipping to a three slipping to a four.
Lastly, Callahan mentioned that charge offs are down and delinquency is up. So that's a quick take, a quick summary of kind of what's coming forward here for me from from this podcast, from my other podcast. Looking forward to getting some feedback on those other podcasts we've got already lined up.
I think they're pretty exciting and I have some other some other ores in the water of some things I'll be adding to the podcast coming here in the fourth quarter. And perhaps In 2025. All right. That's it. That's a wrap as always. I really appreciate you listening. If you enjoy it, if you could alert your friends and peers, that would be great.
And, or if you could rate us on iTunes, Apple podcasts five stars, hopefully if you'd have the opportunity to do that would help me out. I'd appreciate it. And that's it. That's Mark appreciate you listening, signing off with flying colors.
Thank you for joining us on this episode of with flying colors, subscribe on your favorite podcast app to hear future episodes where subject matter experts of all varieties will provide tips on how to achieve success with NCUA. If you would like to learn more about how we assist credit unions, check out our services at marktreichel.com.
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