Credit Union Profits Increase by 208 Percent for 2010

NCUA reported that federally-insured credit unions reported a net income of $4.6 billion for 2010, up 208 percent from $1.6 billion for 2009. The industry’s return on average assets was 0.51 percent for 2010 compared to 0.18 percent for 2009.

Lower cost of funds and provisions for loan and lease losses more than offset the drop in interest income allowing credit unions to post the strong increase in earnings. Provisions for loan and lease losses fell by 26.9 percent to just below $7 billion and interest expense declined by 26.4 percent to $10.9 billion. Non-interest income (net of NCUSIF stabilization income) rose 14 percent to almost $12 billion.

Federally-insured credit unions reported a decline in outstanding loans by 1.3 percent to $564.8 billion. On the other hand, assets and shares grew by 3.4 percent and 4.5 percent, respectively.

NCUA reported that used car loans, credit card loans, and first mortgages were up for 2010, but new auto loans experienced a sharp decline falling by more than 16 percent to $62.9 billion at the end of 2010.

The net worth ratio for credit unions increased to 10.06 percent as credit unions increased their net worth by 5.2 percent to $92.1 billion.

The number of delinquent loans fell by 5.3 percent in 2010 to $9.85 billion. Delinquencies remained at historically high levels, ending 2010 at 1.74 percent; however, it is 10 basis points below the final 2009 number of 1.84 percent.

Loan categories with the highest delinquency rate were member business loans and participation loans at 3.92 percent and 3.83 percent, respectively.

Allowances for loan and lease losses rose during 2010 to $9.4 billion, up from $8.9 billion at the end of 2010. So, even though provisions for loan losses fell, it still exceed net charge-offs for the year.

Charge-offs fell and recoveries increased during 2010. As a result, net charge-offs were $6.4 billion at the end of 2010 down from $6.9 billion at the end of 2009.

NCUA reported that foreclosed and repossessed assets rose by almost 24 percent to $1.86 billion.

Additionally, The number of federally-insured credit unions contracted by 215 during 2010 to 7,339 and credit unions reported a slight increase (0.3 percent) in full time employees to 219,880.

Read the press release.