ALEXANDRIA, Va. (June 3, 2016) – Credit unions continued to increase their lending, with loans outstanding increasing 10.7 percent in the year ending in the first quarter of 2016, the National Credit Union Administration reported today.
“The credit union system again experienced solid performance during the first quarter of 2016,” NCUA Board Chairman Rick Metsger said. “Overall, new and used auto lending was especially strong, and the system gained one million members. With an influx of deposits, federally insured shares at credit unions also neared the $1 trillion mark coming in at $991.7 billion.
“As credit union lending has increased, long-term investments have declined and reduced the system’s interest rate risk. However, delinquency and charge-off rates are slightly higher than a year ago, and member-business loan delinquencies are rising even more. Credit unions making such loans should take note and ensure that they perform proper due diligence to mitigate the risk.”
NCUA released the new figures today, based on Call Report data submitted to and compiled by the agency for the quarter ending March 31, 2016.
Auto, Mortgage and Member Business Lending Continue Growth
Total loans at federally insured credit unions reached $799.5 billion at the end of the first quarter, an increase of 10.7 percent from one year earlier.
Year over year, loans grew in every major category, including:
- New auto loans jumped 15.4 percent to $103.0 billion.
- Used auto loans rose 13.2 percent to $166.8 billion.
- Total first-mortgage loans outstanding grew 10.4 percent to $327.9 billion.
- Other real estate loans grew by 3.9 percent to $74.3 billion.
- Net member-business loan balances increased 13 percent to $59.8 billion.
- Non-federally guaranteed student loans expanded 10.9 percent to $3.6 billion.
- Payday alternative loans originated at federal credit unions rose 8.1 percent to $106.1 million at an annual rate.
Additionally, the loans-to-shares ratio on March 31 was 76.1 percent, up 2.7 percentage points from a year earlier. The ratio, however, fell for the quarter due to an influx of member deposits.
Long-Term Investments Continue to Decline
Total investments, defined as investments greater than three months, by federally insured credit unions stood at $272.4 billion at the end of the first quarter, down 2.8 percent over the last year. Investments with maturities greater than 10 years remained unchanged from the previous quarter at $4.5 billion, though they were down 14.9 percent from the first quarter of 2015.
Investments with maturities of one to three years were $103.5 billion in the first quarter. Overall, these investments have declined 3.3 percent during the last year. The system’s ratio of net long-term assets to total assets came in at 31.7 percent, down 0.8 percentage point from a year ago and the lowest level since the third quarter of 2010.
Overall Delinquency and Charge-Off Rates Rise Slightly
The delinquency rate at federally insured credit unions was 71 basis points in the first quarter, up 2 basis points from a year earlier. The delinquency rate for fixed real estate was down for the last four quarters, but the delinquency rates for credit cards and member business loans rose with member-business loan delinquencies rising faster, coming in at 141 basis points on March 31.
The system’s net charge-off ratio increased slightly to an annualized 52 basis points in the first quarter, up from 47 basis points at the end of the first quarter of 2015.
Asset and Deposit Increases Continue
Total assets in federally insured credit unions rose to more than $1.2 trillion at the end of March, an increase of 7.1 percent for the year ending in the first quarter. Deposits at federally insured credit unions increased 6.8 percent during the same period to nearly $1.1 trillion.
Credit Unions Remain Well Capitalized
The percentage of federally insured credit unions that were well capitalized remained steady in the first quarter with 97.8 percent reporting a net worth ratio at or above the statutorily required 7 percent. At end of first quarter of 2016, 0.7 percent of federally insured credit unions were less than adequately capitalized.
Overall, the credit union system’s aggregate net worth ratio was 10.78 percent at the end of the first quarter, down 3 basis points from a year earlier.
Membership Nears 104 Million, Even as Consolidation Continues
Membership in federally insured credit unions grew to 103.7 million in the first quarter of 2016, an increase of 3.8 percent from the first quarter of 2015. In all, credit unions have added 1 million members during the quarter and 13 million members during the last five years.
Continuing a long-standing trend, the number of federally insured credit unions fell to 5,954 at the end of the first quarter of 2016, 252 less than a year ago. The decline occurred primarily in the number of credit unions under $10 million in assets. Overall, there were 3,721 federal credit unions and 2,233 federally insured, state-chartered credit unions.
Credit Unions’ Net Income Increases; Return on Average Assets Ratio Steady
Federally insured credit unions reported net income of $9.2 billion on an annualized rate in the first quarter of 2016, up 3.5 percent from the $8.9 billion reported in the first quarter a year ago.
The annualized return on average assets ratio for federally insured credit unions stood at 75 basis points the first quarter in 2016, down 3 basis points from a year earlier.
Larger Credit Unions Again Lead the System in Performance
Federally insured credit unions with more than $500 million in assets led the system in most performance measures in the first quarter of 2016, continuing a long-standing trend.
With $902.5 billion in combined assets, these 493 credit unions—up from 481 at the end of 2015—held 72.7 percent of total system assets. The 4,414 credit unions with less than $100 million in assets held 8.6 percent of the system’s total assets.
As in previous quarters, large credit unions again reported the fastest growth in loans, membership and net worth, as well as the highest return on average assets. Credit unions with assets of less than $10 million, as a whole, experienced declines in loans and membership. Credit unions with assets between $10 and $100 had positive net worth and membership growth, but experienced a slight decline in loan growth.
For selected metrics, the table below provides a summary by asset size of federally insured credit unions’ current ratios and annualized growth rates at the end of the first quarter of 2016:
Summary Metrics by Asset Size of Federally Insured Credit Unions
|Metric||More than $500 million||$100 million to $500 million||$10 million to $100 million||Less than $10 million|
|Number of Credit Unions||493||1,047||2,659||1,755|
|Net Worth Ratio||10.6 percent||10.8 percent||11.7 percent||14.9 percent|
|Net Worth Growth||Up 8.4 percent||Up 5.9 percent||Up 2.9 percent||Up 0.4 percent|
|Loan Growth||Up 7.8 percent||Up 4.9 percent||Down 0.1 percent||Down 4.7 percent|
|Membership Growth||Up 6.0 percent||Up 3.0 percent||Up 0.3 percent||Down 0.9 percent|
|Return on Average Assets||87 basis points||51 basis points||32 basis points||5 basis points|
For more information about the performance of federally insured credit unions, NCUA makes the
complete details of the March 2016 Call Report available online here. An
expanded summary of first-quarter performance is available here, and
financial trends data for federally insured credit unions are available here.
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share
Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of
state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.