Lending up, long-term investments down: NCUA 3Q numbers

December 7, 2015

ALEXANDRIA, Va. (12/7/15)--Federally insured credit unions continued to expand lending and reduce longer-term investments in the third quarter of 2015, according to data released by the National Credit Union Administration. The data is based on call report data submitted to and compiled by the agency for the quarter ending Sept. 30.

“Lending continues to grow, which goes hand-in-hand with the continuing economic recovery,” said NCUA Chair Debbie Matz. “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.”

According to the NCUA, membership in federally insured credit unions increased by 3.4 million over the twelve months ending in September to 102,138,141.

Total loans outstanding 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.

Total investments held by federal credit unions declined by 6.3% ($18.2 billion) from the third quarter of 2014. The long-term assets ratio fell to 32.4%, down from 35% at the end of the third quarter of 2014.

Other highlights include:

  • There was strong lending growth over most categories. Growth rates for the year ending in September were: new vehicle loans, 17.6%; used vehicle loans, 13.1%; first mortgages, 10.2%; other real estate loans, 2.8%; student loans, 11.9%; and credit card and other unsecured loans, 7.7%;
  • Total shares and deposits grew by 5.7% in the twelve months to September. The strongest growth was in share drafts, 10%; regular shares, 9%; and money market shares. Certificates were essentially unchanged, with only a 0.4% increase, and balances in IRA/Keogh accounts fell by 0.9%;
  • Credit quality measures were stable. The 0.78% delinquency rate in September was up marginally from 0.74% in June, but down from 0.85% a year ago. Net charge-offs have held at 0.46% during the first three quarters of 2015 compared to 0.48% for the same period in 2014; and
  • Net income or return on assets was down very slightly during the third quarter to 78 basis points of assets, from 81 basis points during the first half. For the nine months ending in September, return on assets was 80 basis points of assets.

“The third quarter was another great one for credit unions” said Bill Hampel, CUNA’s chief policy officer. “Continued strong loan growth and stable earnings are really good signs, although smaller credit unions are still facing headwinds. Earnings for credit unions with less than $50 million in assets averaged 29 basis points in the first three quarters, compared with 80 basis points for all credit unions.”