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Credit Unions Exhibit Strong Loan Growth in 2005

Loans grow rapidly, delinquencies remain low

Alexandria, Va., February 22, 2005 – The nation’s federally insured credit unions reported strong loan growth as delinquencies remained low according to fourth quarter 2005 Call Report data submitted by the nation’s 8,695 federally insured credit unions. 

During 2005, the loan to share ratio climbed to 79.4 percent as loans grew nearly $44 billion, delinquencies remained well below 1 percent. 

 “The strong pace of loan growth is an excellent indication that credit unions are fulfilling their mission of being the source of affordable loans for their members,” said Chairman JoAnn Johnson. “What’s more, net worth continues to grow at a consistent, healthy level, which indicates credit unions are effectively managing their balance sheets.”

Credit unions reported a 0.85 percent annualized return on average assets and the net worth ratio climbed to 11.24 percent during 2005. While the return on average assets declined to .85 percent as a result of increases in operating expenses and the provision for loan and lease loss expenses, the return on average asset ratio of .85 percent remains at a sustained level.  

The major balance sheet categories and membership growth at federally insured credit unions between January 1 and December 31, 2005 follows:

• Assets increased 4.9 percent, to $678.7 billion from $646.9 billion;
• Loans increased 10.6 percent, to $458.2 billion from $414.3 billion;
• Shares increased 3.8 percent, to $577.4 billion from $556.1 billion;
• Investments decreased 7.31 percent, to $148.0 billion from $159.6 billion;
• Net worth increased 7.6 percent, to $76.3 billion from $70.9 billion; and
• Membership increased 1.5 percent, to 84.8 million members.

Examining specifics pertaining to lending, new vehicle loans soared 17.8 percent and 1st mortgage real estate loans grew a substantial 11.4 percent reflecting significant growth in two of credit unions’ largest income producing loan categories. New vehicle lending has outpaced used vehicle lending during the past two years. In 2005, federally insured credit union new vehicle loans grew to $84.0 billion while used vehicle loans grew 2.3 percent to $86.6 billion. 

In the real estate market, 1st mortgage loans grew to $144.9 billion while other real estate loans, such as second mortgage and home equity loans, showed faster paced 18.7 percent growth increasing to $73.5 billion. Reflecting the nation’s strong real estate market, total real estate loans grew 13.8 percent to $218.4 billion in 2005 from $192.0 billion at year-end 2004. 

The smaller loan categories also expanded during 2005. Member business loans granted in 2005 grew 13 percent to $7.7 billion and member business loan volume grew 33.5 percent to total $18.0 billion. Unsecured credit card loans grew 6.3 percent to $23.9 billion and other unsecured loans grew 1.4 percent to $21.2 billion.

The loan delinquency ratio remains quite low at 0.73 percent, and the net charge-off ratio increased only 1 basis point, from .53 to .54 percent in 2005. 

Total shares increased 3.8 percent to $577.4 billion in 2005. As regular shares declined 3.7 percent, share certificates sharply increased 20.4 percent to reach $152.6 billion at year-end 2005.

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

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.