The financial performance of federally-insured credit unions continued to improve in the first quarter of 2013, according to information released by the National Credit Union Administration (NCUA).
For the first quarter, federally insured credit unions had a net income of almost $2.2 billion.
The industry’s return on average assets ratio was a healthy 83 basis points -- down 3 basis points from the prior quarter. However, the low interest rate environment continued to squeeze the net interest margins at credit unions, which fell by 16 basis points in the quarter to 2.77 percent.
Credit unions’ total assets grew by $33.6 billion in the first quarter to $1.06 trillion, while the industry's net worth rose to $108.8 billion, up $2.1 billion for the quarter. Because asset growth outpaced net worth growth, credit unions’ net worth ratio fell slightly during the quarter to 10.31 percent.
At the end of the first quarter of 2013, 95.8 percent of the industry remains well-capitalized reporting a net worth ratio above 7.0 percent. However, 92 credit unions were undercapitalized with net worth ratios below 6 percent, a net gain of 17 credit unions from the end of 2012.
Federally-insured credit unions reported their eighth consecutive quarter of loan growth. Total outstanding loans grew by $2.3 billion in the first quarter to $599.9 billion. On the other hand, deposits (shares) at federally-insured credit unions increased by $32.0 billion in the first quarter to nearly $910.0 billion. As the result, the loan-to-share ratio fell 214 basis points to 65.92 percent.
Asset quality continued to improve. The delinquency ratio of federally insured credit unions declined in the first quarter, shedding 14 basis points to 1.02 percent. Credit unions’ net charge-off ratio also dropped significantly by 12 basis points, to 0.61 percent. This improvement in asset quality caused credit unions to significantly reduce their provisions for loan losses.
NCUA Chairman Debbie Matz expressed concern about the unevenness of industry's performance, as larger credit unions outperformed the industry.
Matz said: "The 423 largest credit unions had a return on average assets of 100 basis points for the quarter. In comparison, 2,279 credit unions with less than $10 million in assets had a return on average assets of negative 14 basis points, and 3,007 credit unions with $10 million to $100 million in assets had a return on average assets of 30 basis points."
To review a summary of first quarter data, click here.
To read the press release.
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Most of the 800K 'new' cu members are likely in migration from their small unprofitables to their larger local profitables. This nation-wide cannibalization within the credit union sytem is a slow motion version of hostile takeovers.
ReplyDeleteIf the NCUA Chair is truly concerned with profit imbalance, then they will change their basis for bail-out insurance assessments from cu deposit balances to cu profits. If Navy is cooperative.
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