Loan growth, net worth, membership all up in second quarter

Loan growth, net worth, and membership are the biggest stories told in the National Credit Union Administration's (NCUA) second-quarter data, according to the agency.  The data show federally insured credit unions (FICU) saw brisk loan growth, their highest net worth ratio since 2008 and record membership levels.

NCUA Chair Debbie Matz, releasing the second-quarter report August 30, said, "The increases in lending, net worth and membership are especially positive signs."

"The brisk loan growth shows that federally insured credit unions are meeting the needs of more borrowers and putting their assets to productive use.  The net worth ratio rose to 10.5%, its highest level since 2008.  Credit union membership continues to reach a new milestone each quarter."

Loans were up 2.3% in the second quarter, and 5.5% in the last four quarters, which the NCUA said is the strongest four-quarter growth since the start of 2009.

"Although the industry is performing well overall, smaller credit unions continue to face challenges with making loans, generating earnings, and attracting members," Matz added.  "NCUA is committed to providing assistance and support to ensure the viability of small credit unions so they can continue to serve local communities."

Regarding lending by FICUs, the NCUA highlighted the following:

  • First mortgage real estate loans rose to $253.8 billion, up 2.1% for the quarter and 5.6% year-over-year;
  • New auto loans expanded to $66.4 billion, up 2.8% for the quarter and 10.7% for the last four quarters;
  • Used auto loans rose to $121.3 billion, up 3.7% for the quarter and 9.3% for the year ending June 3; and
  • Net member business loan balances grew to $43.5 billion, up 2.3% for the quarter and 8.3% for the prior 12 months.

Membership was another big story told by the second quarter numbers.  Reaching a record high and growing by 560,670, credit union membership reaches 95.2 million, according to the NCUA's tabulations.

The NCUA also reported a second quarter earnings increase, a positive jump it attributed in large to increases in fee income and declines in loan-loss provisions.  FICUs in the second quarter had a net income of more than $2.2 billion.  The industry's return on average assets ratio stood at an annualized 85 basis points (bps) points at the end of the second quarter, which the agency said showed progress "inching closer to pre-crisis norms."

The delinquency ratio of FICUs for the second quarter of 2013 was 1.04%; the industry's net charge-off ratio declined to a reported annualized 58 bps:  Since the second quarter of 2012, the net charge-off ratio has declined by 17 bps.