Friday, December 4, 2015

Credit Unions Post Strong Loan Growthn Q3, Delinquencies Up for Second Consecutive Quarter

The National Credit Union Administration (NCUA) is reporting that federally insured credit unions posted strong loan growth during the third quarter.

Total loans at federally insured credit unions reached $769.5 billion in the third quarter of 2015, an increase of 3.3 percent from the previous quarter and 10.7 percent from a year earlier. All major loan categories posted growth during the third quarter -- non-federally guaranteed student loans grew by 5.1 percent; new auto loans were up 4.4 percent; used auto loans rose by 3.7 percent; first mortgage loans and member business loans increased by 3 percent.

The NCUA reported a surge in indirect lending at federally insured credit unions. Indirect loans were $131.5 billion at the end of the third quarter of 2015 and represented 17.09 percent of total industry loans. This is up from approximately $108 billion a year earlier, which accounted for 15.53 percent of all credit union loans.

Overall, share and deposit accounts at federally insured credit unions increased $5.6 billion from the second quarter 2015 and $53.3 billion from the end of the third quarter of 2014 to $992.5 billion.

Because loans grew at a faster rate than shares and deposits, the loan-to-share ratio rose from 75.52 percent at the end of the second quarter to 77.53 percent as of September 30, 2015.

Credit Unions Earned $2.3 Billion in Q3

Federally insured credit unions continued to report positive net income in the third quarter, $2.3 billion, a decline of $82 million, or 3.5 percent, from the third quarter of 2014. As a whole, federally insured credit unions have recorded positive net income for 23 straight quarters.

Year-to-date federally-insured credit union profits were almost $6.9 billion -- up from slightly below $6.8 billion for the same time period of 2014.

Federally insured credit unions’ year-to-date return on average assets ratio stood at an annualized 80 basis points at the end of the third quarter, slightly below the level in the third quarter of 2014. Overall, 78 percent of federally insured credit unions reported positive returns on average assets for the first three quarters of 2015, compared to 76 percent in the first three quarters of 2014.

98 Percent of Credit Unions Were Well-Capitalized

The credit union industry continued to build its net worth during the quarter. The credit union industry's net worth ratio increased by 7 basis points during the third quarter to 10.99 percent.

The percentage of federally insured credit unions that were well-capitalized rose in the third quarter, with 98.0 percent reporting a net worth ratio at or above the statutorily required 7.0 percent. A year earlier, 97.5 percent of credit unions were well-capitalized. As of September 30, 2015, 34 federally insured credit unions were undercapitalized.

Delinquencies Rose for Second Consecutive Quarter

It appears that the credit cycle is turning. Delinquent loans are up for the second consecutive quarter. Loans 60 days or more past due rose by approximately $450 million during the quarter to almost $6 billion and is up by more than $1 billion since March 31, 2015.

In addition, early delinquencies were $6.1 billion at the end of the third quarter, an increase of $456 million from the end of the second quarter.

According to NCUA, delinquency rates edged higher during the quarter, while net charge-off rates unchanged. The delinquency rate at federally insured credit unions rose in the third quarter to 78 basis points, up from 74 basis points the previous quarter, but still below the 85 basis-point level in the third quarter of 2014. The net charge-off ratio was an annualized 46 basis points year-to-date -- the same as in the second quarter of 2015 and down from 48 basis points through the end of the third quarter of 2014.

Read the press release.

1 comment:

  1. What percentage of the increase in delinquency is attributed to medallion loans and when will the forbearance be addressed by congress?
    Otherwise we pay.
    Been to that rodeo before.



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