ALEXANDRIA, Va.–NCUA has released some robust financials for the third quarter, and once again, for large credit unions the numbers were a little more “robuster.”
“Lending continues to grow, which goes hand-in-hand with the continuing economic recovery,” NCUA Board Chairman Debbie Matz said in a statement. “The level of exposure to long-term investments that causes concern about interest-rate risk is declining, although there is still room for improvement. Overall, the third-quarter data indicate the credit union system maintains its soundness while fulfilling its primary mission of providing affordable credit.”
Among the data for federally insured credit unions released by NCUA:
- Total loans at federally insured credit unions reached $769.5 billion in the third quarter of 2015, an increase of 3.3% from the previous quarter and 10.7% from a year earlier.
- Over the year ending in the third quarter of 2015, loans grew across all asset sizes and in every major category, including:
* New auto loans grew to $96.9 billion, up 4.4% from the previous quarter and up 17.6% from the third quarter of 2014.
* Used auto loans increased to $158.6 billion, up 3.7% from the previous quarter and up 13.1% from the third quarter of 2014.
* Total first mortgage loans outstanding reached $315.5 billion, up 3.0% from the previous quarter and up 10.2% from the third quarter of 2014. Fixed-rate first mortgage loans made up 59.0% of first mortgage loans outstanding at the end of the third quarter.
Other mortgage loans were $73.5 billion, up 1.8% from the previous quarter and up 2.8% from the third quarter of 2014.
NCUA also reported that net member business loan balances grew to $56.0 billion, up 3.0% from the previous quarter and up 11.4% from the third quarter of 2014.
- Non-federally guaranteed student loans stood at $3.4 billion, up 5.1% from the previous quarter and up 11.9% from the third quarter of 2014.
- Payday alternative loans outstanding at federal credit unions were $36.1 million, up 2.7% from the previous quarter and up 13.8% from the third quarter of 2014.
Loan-to-Share Ratio & Membership
The loan-to-share ratio at the end of Q3 was 77.5%, up two percentage points from the previous quarter and up 3.5 percentage points from the end of the third quarter of 2014.
Meanwhile, membership in federally insured credit unions grew to 102,138,141 at the end of the third quarter of 2015, an increase of 3.4 million from the end of the third quarter of 2014.
The number of federally insured credit unions fell to 6,090 at the end of the third quarter, 260 fewer than at the end of the third quarter of 2014, a decline of 4.1%. Consolidation in the financial industry has been a long-running trend.
Investments
NCUA reported that total investments by federally insured credit unions stood at $270.3 billion at the end of the third quarter, a decline of $18.2 billion, or 6.3%, from the end of the third quarter of 2014. Compared to a year earlier, investments declined in all duration categories except those with maturities between one and three years. Investments with maturities of one to three years increased 9.5% from a year earlier, to $105.4 billion, NCUA said. Investments with maturities greater than 10 years dropped 25.2% from the third quarter of 2014, to $4.5 billion.
The credit union system’s net long-term assets ratio fell to 32.4% in the third quarter from 35.0% a year ago. Credit unions with less than $10 million in assets had the lowest net long-term asset ratio of any peer group at 11.0%. In comparison, credit unions with more than $500 million in assets had a ratio of 33.4%.
Net Income
Federally insured credit unions continued to report positive net income in the third quarter, $2.3 billion, a decline of $82 million, or 3.5%, from the third quarter of 2014, NCUA said. As a whole, federally insured credit unions have recorded positive net income for 23 straight quarters.
“This ongoing trend contributed to a rise in the system’s total net worth,” said NCUA. “The aggregate net worth ratio reached 10.99% at the end of the third quarter, up six basis points from a year earlier.”
Delinquencies
The delinquency rate at federally insured credit unions rose slightly in the third quarter, to 78 basis points, up from 74 basis points the previous quarter, but still below the 85 basis-point level in the third quarter of 2014. The net charge-off ratio was an annualized 46 basis points year-to-date, down from 48 basis points through the end of the third quarter of 2014.
The percentage of year-to-date loan charge-offs due to bankruptcy in the third quarter was 17.2, 247 basis points below the end of the third quarter of 2014.
ROA, Capital And Trends
Federally insured credit unions’ year-to-date return on average assets ratio stood at an annualized 80 basis points at the end of the third quarter, slightly below the level in the third quarter of 2014.
Overall, 78% of federally insured credit unions reported positive returns on average assets for the first three quarters of 2015, compared to 76% in the first three quarters of 2014.
The percentage of federally insured credit unions that were well-capitalized rose in the third quarter, with 98.0% reporting a net worth ratio at or above the statutorily required 7.0%. A year earlier, 97.5% of credit unions were well-capitalized. As of Sept. 30, 2015, less than one percent of federally insured credit unions were undercapitalized.
NCUA said that total assets in federally insured credit unions rose to $1.18 trillion at the end of the third quarter of 2015, an increase of $72.6 billion, or 6.6%, from the end of the third quarter of 2014.
Overall, share and deposit accounts at federally insured credit unions increased $53.3 billion from the end of the third quarter of 2014 to $992.5 billion. Rate-sensitive money market accounts rose by $9.8 billion from the third quarter of 2014, NCUA said.
Large & Small
As has been the case, NCUA reported that federally insured credit unions with more than $500 million in assets continued to lead growth in the system in most performance measures in the third quarter of 2015. With $841.6 billion in combined assets, these 468 credit unions continued to hold more than seven out of ten dollars of total system assets at the end of the quarter, NCUA said.
Large credit unions also reported the strongest growth in loans and membership and the highest return on average assets.
Credit unions with assets of less than $10 million recorded positive loan and net worth growth and a higher net worth ratio than other peer groups, but membership continued to decline.