Friday, 29 March 2013

City of Derry Building Society - The Smallest Building Society

The minnow of the Building Societies Association, the City of Derry Building Society sent out its 2012 Summary Financial Statement to its members ths week. The BSA website discloses that as of 31st December 2011 the Society had a total of 432 borrowers and 2063 investing members. With the Edinburgh based Century Building Society having merged with its much larger competitor, the Scottish Building Society, the City of Derry now has the honour of being the smallest building society in the UK.

The financial summary shows total assets as of 31st December of £42,608,000, up from £41,302,000, (plus 3.16%). Gross mortgage lending rose slightly and the total mortgage balance (excluding provisions) rose 2.6 % to end the year at £31.55 million excluding all provisions. Yet again the directors have thought it prudent to allocate the bulk of the year's profits as a provision against losses on the mortgage portfolio. It would seem that total provisions now stand at some £710,000 (excluding deferred mortgage indemnity insurance income). Members are told that no mortgage losses have crystallised as yet and that, "the Directors are confident that loan provisions ....... will reduce as the local housing market stabilises." Earlier in the Financial Statement it is reported that house prices in Northern Ireland are, "now averaging approximately 45% of their 2007 peak."

It will be interesting to see the full annual accounts for 2012. These will disclose the total number of mortgages where repayments are more than twelve months in arrears. The 2010 accounts disclosed seven such cases with the arrears in these cases totalling £74,946. In the subsequent year's accounts the number had increased to eleven with arrears of £109,228. Perhaps what would be even more elucidating would be knowing the total number of mortgages experiencing arrears and the directors' estimate as to what percentage of mortgages/chargees are in negative equity and by how much.

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