Credit Unions Performance in the 2nd Quarter

NCUA is reporting that key indicators for federally insured credit unions (FICUs) either stabilized or improved in the second quarter of 2011.

FICUs reported net income of $1.88 billion for the second quarter bringing year-to-date profits to $3.58 billion. The return on assets rose from 74 basis points at the end of the first quarter to 77 basis points at the end of the second quarter. In comparison, the return on assets was 41 basis points a year ago.

Net interest margin was virtually unchanged increasing by 1 basis point during the quarter to 3.17 percent, while net operating expenses as a percent of average assets was unchanged at 2.43 percent. The low interest rate environment caused the cost of funds as a percent of average assets to fall 25 basis points from December 2010 to 0.96 percent as of June 2011. FICUs also reported reducing their provisions for loan and lease losses during the second quarter.

The stronger earning at FICUs caused the net worth of FICUs to increase by 2 percent during the quarter to $95.6 billion. Coupled with slower asset growth, the net worth ratio for FICUs rose by 17 basis points to 10.14 percent at the end of the second quarter.

Credit unions reported that assets and shares (deposits) at credit unions rose during the quarter. Assets increase by 0.3 percent to $942.5 billion, while shares increased by 0.1 percent to $812.2 billion.

NCUA noted that loans edged higher by 0.7 percent during the second quarter to $564 billion -- reversing three consecutive quarter of declining loan volume. Outstanding new car loans and other real estate loans fell during the second quarter, while used car loans, first mortgages, and credit card loans increased during the quarter.

NCUA reported that almost $8.9 billion in loans was sixty days or more past due -- down from $9.1 billion in the first quarter. The delinquent loan ratio fell for the second consecutive quarter to 1.58 percent, a 5 basis point reduction from the first quarter. However, loans that are 12 months or more past due rose during the quarter from $1.54 billion to $1.59 billion.

Credit unions reported a slowing in the pace of charge-offs during the second quarter. Charge-offs for the second quarter were less than $1.5 billion compared to slightly more than $1.6 billion for the first quarter of 2011.

Read the press release.