Assets, Loans, Deposits, Membership Up in Q1 2017

The National Credit Union Administration (NCUA) reported that assets, loans and shares (deposits) at federally insured credit unions expanded during the first quarter.

According to the NCUA, loans grew by 10.6 percent over the last year to to $884.6 billion. However, loan growth slowed during the first quarter of 2017 to an annualized rate of 7.12 percent. With the exception of credit card loans, all other major loan categories posted an increase during the first quarter.

Insured shares and deposits rose $78 billion, or 7.8 percent, over the four quarters ending in the first quarter of 2017 to $1.1 trillion. However, the pace of share growth accelerated during the first quarter of 2017 to 16.62 percent.

So, while the loan-to-share ratio of 77.73 percent was up from a year ago, it was down from the end of 2016.

Federally insured credit unions added 4.3 million members over the year, and credit union membership in these institutions reached 108.0 million in the first quarter of 2017.

Net Income Up Year-over-Year, But Return on Average Assets Down

Net income for federally-insured credit unions was $2.35 billion for the first quarter of 2017. In comparison, net income was almost $2.29 billion one year earlier.

The return on average assets (ROA) was 0.71 percent for the first quarter of 2017. This was down from 0.77 percent at the end of 2016 and 0.75 percent from a year earlier. The median return on average assets across all federally insured credit unions was 33 basis points, unchanged from the first quarter of 2016.

Higher net interest margins and lower operating expenses as a percent of average assets had a positive impact on the credit union industry's ROA, while lower non-interest income as a percent of average assets and higher provisions for loan loan losses as a percent of average assets had a negative impact on ROA.

Net interest margins as a percent of average assets was 2.89 percent at the end of the first quarter of 2017. This was an improvement of 1 basis point compared to the end of 2016 and 2 basis points compared to a year ago.

Non-interest income as a percent of average assets was 1.28 percent for the first quarter of 2017. This fell by 11 basis points compared to the end of 2016 and by approximately 3 basis points from a year ago.

Operating expenses as a percent of average assets fell 6 basis points during the quarter to 3.04 percent.

Net Worth Increases

Net worth increased during the first quarter of 2017. Net worth was $143.1 billion as of March 31, 2017. This was up from $140.8 billion at the end of 2016 and 133.8 billion at the end of the first quarter of 2016.

However, the net worth ratio fell 19 basis points during the first quarter to 10.70 percent. Compared to a year ago, the net worth ratio was down 8 basis points.

As of March 31, 2017, 97.75 percent of all federally-insured credit unions had a net worth ratio of at least 7 percent. Forty-one credit unions had net worth ratios below 6 percent.

Delinquency Rates Nearly Unchanged Over the Year, But Net Charge-Off Rate Was Higher

The NCUA reported that delinquent loans were $6.1 billion as of March 31, 2017. The percentage of loans 60 days or more past due was 0.69 percent. This is down 2 basis points and 14 basis points from a year ago and last quarter, respectively.

Net charge-offs rose from $1 billion as of March 2016 to $1.3 billion as of March 2017. the net charge-off rate rose from 0.52 percent to 0.58 percent over the same time period.

Large CUs Outperform Small CUs

Credit unions with assets greater than $1 billion reported the strongest growth in loans, membership and net worth over the year ending in the first quarter of 2017. Credit unions with less than $50 million in assets reported declines in loans, membership and net worth over the year.

The number of credit unions with $1 billion or more in assets increased rom 263 in the first quarter of 2016 to 278 in the first quarter of 2017. These 278 federally insured credit unions held 62 percent of total system assets. Loan growth was 14.7 percent over the year. Membership rose 9.8 percent. Net worth increased 11.3 percent.

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