Linda Jekel, Director of Credit UnionsMarch 10, 2011

Economic Outlook◦ Unemployment◦ Housing

Outside Events Health of WA State Chartered Credit Unions

◦ Closures Examination Issues What’s on your mind? Q&A

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Less than vibrant recovery Slight upturn in economy over the next 2 years WA state similar to nation in job growth Employment peak expected in 2nd quarter 2013 WA state’s per-capita income surpasses the

nation Highly skilled and highly paid workers Strong international trade

Source:

Office of Financial Management - December 2010

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WA State 9.2%

Clark County 12.9% Snohomish County 9.8% Yakima Counties 10.5% Pierce County 9.2% King County 8.4% Spokane County 9.1% Whatcom County 8.1% Thurston County 7.6%

Source: Employment Security Department (Workforce Explorer)(not seasonally adjusted)

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City Forecast Seattle − 6.4% Bellingham − 6.0% Vancouver − 5.6% Spokane − 5.1% Yakima − 4.7% Tri-Cities + 3.4%

Source: HousingPredictor.com

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Corporate CU System

Natural person credit union failures

Congressional Regulatory Reform

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Net worth still strong at 8.9% Delinquencies at 1.8% Net charge-offs at 1.39% Allowance for loan loss reserves being funded for

economic factors, and FAS 114 ROAA (excluding Corp CUs) negative for 27 CUs Operating expenses low or being cut Prudent risk management

*Using consolidated ratios

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As of December 2010: 18 closed credit unions with $911.5 million in total assets

As of December 2009: 15 closed credit unions with $1.3 billion in total assets

Source: Bank Info Security

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Concern for asset quality◦ Looking at modifications, extensions, troubled debt

restructuring Rebuilding earnings Compliance exams? Audits? Interest Rate Risk (IRR)

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Contact info:

Linda JekelDirector of Credit UnionsPhone: (360) 902-8778Email: LJekel@dfi.wa.gov