Tuesday, September 6, 2016

Total Loans at the End of Q2 Top $800 Billion for the First Time

The National Credit Union Administration (NCUA) reported robust year-over-year loan growth at federally insured credit unions (FICUs) at the end of the second quarter of 2016.

Total loans outstanding at FICUs reached $823.4 billion at the end of the second quarter of 2016, an increase of 10.5 percent from one year earlier. Every major loan category posted year-over-year growth with new auto loans posting the fastest growth rate at 15.6 percent.

Indirect loans at FICUs were up $26.1 billion from a year ago and $8.1 billion from the first quarter of 2016 to almost $150.7 billion as of June 2016.

Deposits (shares) grew at a slower rate than loans over the last year. Deposits at federally insured credit unions totaled nearly $1.1 trillion and increased 7.3 percent from the second quarter of 2015.

As a result, the loans-to-shares ratio was 77.8 percent, up from 75.5 percent a year earlier.

Net Income Up 3.1 Percent Compared to Same Period in 2015

FICUs reported net income of $4.76 billion in the first half of 2016, up 3.1 percent from the $4.6 billion reported in the first half of 2015. Net income for the second quarter was almost $2.47 billion compared to $2.29 billion as of the first quarter of 2016.

The annualized return on average assets ratio at 77 basis points in the first half of 2016, down from 81 basis points a year earlier. The below chart shows the impact of various components of the income statement on the return on average assets. The median return on average assets was 35 basis points at an annual rate during the first half of 2016, up from 33 basis points a year earlier.

Less Than One Percent of FICUs Undercapitalized

The percentage of federally insured credit unions that were well capitalized remained steady in the second quarter with 97.8 percent reporting a net worth ratio at or above the statutorily required 7 percent. At the end of the second quarter of 2016, 0.6 percent of federally insured credit unions were less than adequately capitalized.

Overall, the credit union system’s aggregate net worth ratio was 10.85 percent as of the end of June, 7 basis points higher than the previous quarter, but 7 basis points lower than a year earlier.

Delinquencies and Net Charge-Offs

Both delinquencies and net charge-offs rose during the second quarter of 2016.

Delinquent loans increased during the second quarter of 2016 by $500 million to almost $6.2 billion. The delinquency rate on loans rose 4 basis points during the quarter to 0.75 percent as of June 2016.

Net charge-offs at FICUs increased by $1 billion during the quarter to slightly more than $2 billion as of June 2016. However, the net charge-off rate fell 1 basis point to 0.51 percent during the quarter.

Growth Concentrated at Largest CUs

NCUA reported that the bulk of the industry's growth arose from the largest credit unions. There were 494 credit unions with $500 million or more in assets as of June 2016. These institutions reported the greatest growth in loans, membership and net worth, as well as the highest return on average assets.

Read the press release.

Review the financial trends chart pack.

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