ALEXANDRIA, Va. (5/30/13)--The National Credit Union Administration released figures Thursday that claim the fastest first-quarter loan growth for federally insured credit unions in five years, as well as dramatic membership growth of more than 800,000 new members.
To put the membership growth into perspective, Credit Union National Association figures show it to be the strongest quarter in credit union history.
CUNA President/CEO Bill Cheney said the membership numbers reflect "a real cultural shift that is taking place."
"Not only do credit unions generally offer better rates and lower fees, they have powerful appeal in today's environment where so many people are put off by big conglomerates and are turning instead to locally based, community-oriented businesses.
"Credit unions, as cooperatives owned by the people they serve, embody those traits, and consumers are flocking to them in huge numbers. Today new tools like our consumer web site, www.aSmarterChoice.org, make it easier than ever for consumers to find a credit union they can join," he added.
The NCUA also reported a decline in delinquencies and charge-offs in the first quarter of 2013, and said the data reflect "continuing overall improvement in the credit union industry's performance."
"As the economic recovery continues, American families are regaining their financial footing and so are federally insured credit unions," NCUA Chair Debbie Matz said. During the first quarter, credit unions closed on $600 billion in total loans and, with the membership growth, reached 94.6 million members.
The delinquency ratio of federally insured credit unions declined, dropping 14 basis points (bp) to 1.02%. Net charge-off ratios also dropped significantly by 12 bp, to 0.61%. The agency noted that the declines reflect significant improvement from the highs of 1.84% for delinquencies and 1.21% for charge-offs reached in 2009.
Federally insured credit unions reported net income of nearly $2.2 billion for the quarter, slightly above the industry's results in the last quarter of 2012. The industry's return-on-average-assets ratio fell by 3 bp but remained healthy at 83 bp.
Mike Schenk, CUNA vice president of economics and statistics, said of the credit union results, "As the economy and labor markets continue to improve, we fully expect credit union operating results overall to revert to the norm within the next year or so."
"However, that being said, we do believe that credit union bottom line results--net income as a percentage of average assets--will continue to reflect some of the tough headwinds in the economy. For instance, we do not expect to see return on assets return to the 1% benchmark for the remaining 18 months of our current economic forecast."
Schenk added that CUNA expects to see loan demand remain high this year--driven by pent-up mortgage and auto loan demand. Increases in mortgage loan activity are likely to shift from refinance to purchase requests, but to remain strong.
"Auto lending has been strong and people will continue the trend that has been building over the last couple of quarters and keep demand high," Schenk said, adding that credit unions are likely to benefit from much of the demand because of their superior rates, compared to banks.
"Credit union auto loan rates are currently about a point below bank rates. An average borrower could save about $1,000 with a credit union used auto loan at this time," he added.
For more on the NCUA report, use the resource link.