National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314-3428
Phone: (703) 518-6337
Web Address: http://www.ncua.gov/

Credit Unions Exhibit Strong Growth

Loans grow rapidly as delinquencies decline

Alexandria, Va., December 22, 2005 – The nation’s federally insured credit unions reported strong 12.1 percent annualized loan growth and delinquent loans remained below 2004 levels during the first nine months of 2005 according to third quarter 2005 Call Report data submitted by the nation’s 8,795 federally insured credit unions.

“I commend America’s federally insured credit unions for their solid performance in the third quarter,” said NCUA Chairman JoAnn Johnson. “The consistent strong performance reflects a robust economy and the good work of the nation’s credit unions in extending access to affordable financial services.”

The loan to share ratio climbed to 78.3 percent as loan growth of $17.3 billion in the third quarter pushed the year-to-date increase in loans to $37.5 billion while loan delinquencies of 0.67 percent remain below 2004 levels.

Earnings remain strong, with credit unions reporting a 0.93 percent annualized return on average assets. Improving yields on investments and loans help stabilize the net interest margin at 3.26 percent. These strong earnings resulted in annualized net worth growth of 8.6 percent and increased the overall net worth ratio to 11.15 percent.

The major balance sheet categories and membership growth at federally insured credit unions between January 1 and September 30, 2005 follows:

• Assets increased 4.6 percent, to $677.0 billion from $647.0 billion;
• Loans increased 9.1 percent, to $451.8 billion from $414.3 billion;
• Shares increased 3.8 percent, to $577.1 billion from $556.1 billion;
• Investments decreased 3.26 percent, to $154.5 billion from $159.7 billion;
• Net worth increased 6.5 percent, to $75.5 billion from $70.9 billion; and
• Membership increased 1.7 percent, to 85.0 million members.

Examining specifics, real estate continues to lead expansion among income producing loans. First mortgage loans grew 9.0 percent, up to $141.7 billion from $130.0 billion, while other real estate loans, such as second mortgage and home equity loans, showed even higher 14.4 percent growth, increasing to $70.8 billion from $61.9 billion. Combined, all real estate loans now comprise 47.0 percent of total loans, up from 46.3 percent at December 2004.
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Vehicle loans continue to demonstrate strong growth. New auto loans grew by a substantial 17.0 percent, up to $83.4 billion from $71.3 billion, while used auto loans grew 3.8 percent, up to $87.9 billion from $84.7 billion.

While the dollar amount of delinquent loans reflects a 1.6 percent increase over December 2004 levels, the ratio of delinquent loans to total loans declined to 0.67 percent from the year end 2004 level of 0.72 percent. The net charge off ratio has remained constant in 2005 at 0.52 percent.
Regular shares showed a slight decline of $1.9 billion, or 0.95 percent through September 2005, while total shares increased $21 billion. This, along with the increase in the cost of funds, appears to reflect a continued shift toward higher costing share types such as share certificates.

A consolidated balance sheet, with additional details, is available on the NCUA website at http://www.ncua.gov/data/FOIA/foia.html

The following data is now available for request on the NCUA website at http://webapps.ncua.gov/ncuafpr/

• Financial Performance Reports (FPRs) for single charters that include the September 2005 peer average ratios;
• Aggregated FPRs for user-defined groups of credit unions as of September 2005; and
• Two-pages (financial summary and ratio analysis) of a September 2005 FPR for a single charter can be viewed online.

The National Credit Union Administration charters and supervises federal credit unions. NCUA, with the backing of the full faith and credit of the U.S. government, operates and manages the National Credit Union Share Insurance Fund, insuring the accounts of 85 million account holders in all federal credit unions and the majority of state-chartered credit unions.

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