ALEXANDRIA, Va. (Sept. 6, 2016) – Total lending at federally insured credit unions increased to $823.4 billion in the second quarter of 2016, the National Credit Union Administration reported today.
“The credit union system again performed solidly in the second quarter,” NCUA Board Chairman Rick Metsger said. “Loans continued to rise at a double-digit pace over the year with growth in every major category. New auto loans rose 15.6 percent, the fastest of all loan categories. Membership grew by 1.2 million for the quarter and 3.8 million for the year.
“During the quarter, credit unions continued to move away from long-term investments as they increased lending to members, but there were small increases in overall delinquency and charge-off rates relative to a year ago, and delinquency rates in some loan categories were significantly above their year-ago levels. Going forward, it’s important for credit unions to remain diligent in assessing underwriting risks to keep overall system risk to manageable levels.”
NCUA released the new figures today, based on Call Report data submitted to and compiled by the agency for the quarter ending June 30, 2016.
Loans Outstanding Up 10.5 Percent
Total loans outstanding at federally insured credit unions reached $823.4 billion at the end of the second quarter of 2016, an increase of 10.5 percent from one year earlier.
Year over year, loans grew in every major category, including:
- New auto loans increased 15.6 percent to $107.3 billion.
- Used auto loans rose 13.1 percent to $173.0 billion.
- Total real estate lending grew 8.7 percent to $411.2 billion.
- Net member-business loan balances increased 13.6 percent to $61.8 billion.
- Non-federally guaranteed student loans expanded 10.9 percent to $3.6 billion.
- Payday alternative loans originated at federal credit unions rose 4.2 percent during the first half of 2016, to $119.9 million at an annual rate.
The loans-to-shares ratio was 77.8 percent, up from 75.5 percent a year earlier. The same ratio was slightly higher for low-income credit unions at 79.9 percent as of June 30.
Short-Term Investments Rise as Longer-Term Investments Fall
Total investments by federally insured credit unions stood at $271.9 billion at the end of the second quarter, down 2.5 percent from the second quarter of 2015.
Short-term investments grew from the end of the second quarter of 2015, while investments of one year or longer declined in that period:
- Investments with maturities of less than one year totaled $74 billion, an increase of 8.1 percent.
- Investments with maturities of one to three years were $103.7 billion, a decline of 4.4 percent.
- Investments with maturities of three to 10 years were $90.3 billion, a decline of 7.1 percent.
- Investments with maturities greater than 10 years were $3.9 billion, a decline of 18.3 percent.
The system’s ratio of net long-term assets to total assets was 32.2 percent on June 30, down from 32.6 percent a year earlier.
Overall Delinquency and Charge-Off Rates Increase Slightly
The delinquency rate at federally insured credit unions was 75 basis points in the second quarter, up 1 basis point from a year earlier.
- The delinquency rate for fixed real estate was 55 basis points, down from 68 basis points in the second quarter of 2015.
- The delinquency rate for credit cards was 93 basis points, compared to 86 basis points a year earlier.
- The delinquency rate for non-federally guaranteed student loans was 119 basis points, 20 basis points higher than a year earlier.
- The member business loan delinquency rate was 149 basis points, 47 basis points higher than the year before.
The system’s net charge-off ratio increased slightly to an annualized 51 basis points in the first half of 2016, up from 46 basis points in the first half of 2015.
Asset and Deposit Increases Continue
Total assets in federally insured credit unions exceeded $1.25 trillion in the second quarter, an increase of 7.4 percent for the year.
Deposits at federally insured credit unions totaled nearly $1.1 trillion and increased 7.3 percent from the second quarter of 2015.
Credit Unions Add Members as System Consolidation Continues
Membership in federally insured credit unions in the second quarter of 2016 reached 104.9 million, an increase of 3.8 percent from the second quarter of 2015.
In all, credit unions added 1.2 million members during the quarter and more than 14 million members during the last five years. There were 3,679 federal credit unions and 2,208 federally insured, state-chartered credit unions at the end of the second quarter.
Credit union system consolidation, primarily the result of mergers, also continued in the second quarter. The number of federally insured credit unions fell to 5,887, down 272 from a year earlier. Nearly two-thirds of the decline occurred in credit unions with less than $10 million in assets.
While the number of federally insured credit unions fell, the number of credit unions with the low-income designation rose. At the end of the second quarter, there were 2,426 low-income credit unions with 36.5 million members. In all, two in five credit unions now have the low-income designation and one in three members belong to a low-income credit union.
Credit Unions Remain Well Capitalized
The percentage of federally insured credit unions that were well capitalized remained steady in the second quarter with 97.8 percent reporting a net worth ratio at or above the statutorily required 7 percent. At the end of the second quarter of 2016, 0.6 percent of federally insured credit unions were less than adequately capitalized.
Overall, the credit union system’s aggregate net worth ratio was 10.85 percent as of the end of June, 7 basis points higher than the previous quarter, but 7 basis points lower than a year earlier.
Net Income Increases; Return on Average Assets Ratio Declines Slightly
Federally insured credit unions reported an annualized net income of $9.5 billion in the first half of 2016, up 3.1 percent from the $9.2 billion reported in the first half of 2015.
The annualized return on average assets ratio for federally insured credit unions stood at 77 basis points in the first half of 2016, down from 81 basis points a year earlier. The median return on average assets was 35 basis points at an annual rate during the first half of 2016, up from 33 basis points a year earlier.
Larger Credit Unions Seeing Most Growth
Federally insured credit unions with assets of $500 million or more led the system in most performance measures in the second quarter of 2016, continuing a long-running trend.
With $917.1 billion in combined assets, these 494 credit unions held 73.1 percent of total system assets. The 4,345 credit unions with $100 million or less in assets held 8.4 percent of total system assets.
As in previous quarters, large credit unions reported the greatest growth in loans, membership and net worth, as well as the highest return on average assets. Credit unions with assets between $10 million and $100 million had positive growth in all metrics. Credit unions with assets of less than $10 million saw positive growth in loans and net worth but continued to see declining membership. 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 second quarter of 2016.
|More than $500 million||$100 million to
|$10 million to
|Less than $10 million|
|Number of Credit Unions||494||1,048||2,622||1,723|
|Net Worth Ratio||10.7 percent||10.9 percent||11.8 percent||15 percent|
|Net Worth Growth||+ 8.6 percent||+ 6.1 percent||+ 3.6 percent||+ 0.5 percent|
|Loan Growth||+ 10.7 percent||+ 7.8 percent||+ 4.4 percent||+ 0.6 percent|
|Membership Growth||+ 6.4 percent||+ 2.9 percent||+ 0.4 percent||- 1.3 percent|
|Return on Average Assets||88 basis points||54 basis points||37 basis points||9 basis points|
For more information about the performance of federally insured credit unions, NCUA makes the complete details of the June 2016 Call Report data available online here. A summary of second-quarter performance is available here, and financial trends data for federally insured credit unions are available here.