NCUA reported today that credit union earnings for 2012 were $8.5 billion, the highest figure ever reported by the industry.
Net income was up 36 percent from the $6.3 billion reported in 2011.
Lower provisions for loan losses, interest expenses, and noninterst income contributed to the record profits. Provisions for loan and lease losses were down almost 25 percent year-over-year to $3.5 billion. Noninterest income was up $2.3 billion for the year to almost $14.6 billion, while interest expenses fell almost $1.5 billion to approximately $7.2 billion.
The return on average assets (ROA) for the credit union industry was 0.86 percent. However, profitability varied across credit union size groups. Credit unions with $500 million or more in assets reported an ROA of 1.02 percent. But credit unions with under $10 million in assets were unprofitable with an ROA of negative 0.02 percent.
The net worth ratio for the industry was 10.44 percent at the end of 2012 -- up 23 basis points from a year ago. Almost 97 percent of the credit union industry reported a net worth ratio of 7 percent or higher, while only 76 credit unions reported a net worth ratio belwo 6 percent.
In 2012, assets were up 6.24 percent, loans increased by 4.59 percent, and deposits (shares) rose by 6.10 percent.
Asset quality improved during 2012, as delinquent loans fell from $9.1 billion at the end of 2011 to $6.9 billion at the end of 2012. The delinquent loan ratio was 1.16 percent -- down 2 basis points from the prior quarter and 44 basis points from a year ago. The agency noted that Troubled Debt Restructurings stood at $10.3 billion at the end of 2012.
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The cus with Assets of $500+MM are thriving. The $100MM and under are not carved out in the NCUA's presentation. They, like those $10MM and under, are stagnant, so in decline.
ReplyDeleteDear CU Colleagues,
ReplyDeleteIs NCUA, the credit union industry’s federal insurance regulator, really supposed to spend operating fee income to be the industry's public relations firm/ cheerleader -- especially when NCUA selective ignores some serious under-the-surface issues facing the industry? The NCUA Express Mail sent out March 1, 2013 boasts about the record net income for the industry in 2012. While that is certainly good news, a couple quick stats tell a much harsher reality than the one being promoted by NCUA (cheer) leaders.
• The top 5% of CUs (based on asset size) produced 74% of the record net income NCUA proudly claims (in more ways the one).
• Put another way, 95% of all credit unions account for only 26% of the 2012 net income.
• Navy Federal, the nation’s largest CU, produced net income equal to the combined net income of the nation’s 6,035 smallest CUs.
• 31% of credit unions under $100 Mil in assets had negative earnings for 2012.
The significant disparity between the haves and have-nots is an ominous sign of looming upheaval facing the industry in the not-too-distant future. NCUA’s push for expanded MBL and alternative capital will only intensify the disparity and does almost nothing for the 6,035 smallest credit union.
Enjoy your politics,
Dale Kerslake
President/CEO
Cascade FCU