Loans and Assets Up in Q2 2014

NCUA reported that credit union loans and assets rose during the second quarter of 2014; but shares (deposits) fell.

Federally insured credit unions’ total assets grew $47.3 billion, or 4.5 percent, from the second quarter of 2013, to rise above $1.1 trillion for the first time.

Federally-insured credit unions reported that in the second quarter of 2014, outstanding loan balances rose 9.8 percent from the second quarter of 2013 to $673.9 billion, the highest year-over-year growth rate since the first quarter of 2006.

All major loan categories grew in the second quarter led by strong auto lending. New and used car loan balances were up year-over-year by 17 percent and 11.6 percent, respectively. Business loans at credit unions were $48.8 billion at the end of the second quarter -- up 12 percent from a year ago.

Overall, share and deposit accounts declined slightly from the first quarter to $940.4 billion, but were 3.4 percent higher than the $909.5 billion at the end of the second quarter of 2013.

The growth in loans combined with the contraction in deposits caused the loan to deposit ratio to increase to 71.7 percent, the highest ratio since the fourth quarter of 2010.

Net income in the quarter ending June 30 was $2.3 billion, up 2.9 percent from a year earlier. Return on average assets rose by 3 basis points between the first and second quarter to 81 basis points; but was 3 basis points below last June's return on average assets.

Factors contributing to higher net income were increases in both interest and non-interest income. Higher expenses in the second quarter of 2014 negatively impacted net income.

The net worth ratio of federally-insured credit unions rose 16 basis points during the second quarter to 10.77 percent. Ninety-seven percent of all credit unions are well-capitalized with a net worth ratio of at least 7 percent. Five credit unions were critically undercapitalized as of June 2014.

There was a slight uptick in the delinquency ratio during the second quarter. The delinquency ratio of 0.85 percent was up 4 basis points from the previous quarter but was still 19 basis points below the delinquency ratio in the second quarter of 2013. The net charge-off ratio was 49 annualized basis points, down from 50 basis points in the previous quarter and down from 58 basis points a year earlier.

NCUA continued to express concern about interest rate risk as the industry’s net long-term asset ratio remained high at 35.4 percent.

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