Thursday, September 6, 2018

Loans Topped $1 Trillion at Federally-Insured Credit Unions

Federally-insured credit unions (FICUs) reported a mid-year profit $6.3 billion, according to the National Credit Union Administration (NCUA). Net income for the second quarter was almost $3.2 billion.

Eight hundred and twenty-six FICUs reported a mid-year loss.

FICUs reported a return on assets of 0.90 percent as of mid-year 2018, unchanged from the first quarter of 2018. The median return on average assets was 0.52 percent as of June 2018.

During the second quarter, net interest margins at FICUs improved by 4 basis points to 3.07 percent; but fee and other operating income as a percent of average assets fell by 2 basis points to 1.37 percent.

In addition, operating expenses as a percent of average assets rose 2 basis points during the second quarter to 23.10 percent.

Net Worth Position of FICUs Improved During Q2

NCUA noted that net worth at FICUs grew by nearly $3.2 million to $157.4 billion. Secondary capital increased by 6.6 percent during the quarter to $248.1 million.

The net worth ratio for the industry increased by 12 basis points during the second quarter to 11.01 percent.

At the end of June 2018, 97.86 percent of federally-insured credit union had a leverage ratio of at least 7 percent. This is up from 97.70 percent as of March 2018. Thirty FICUs had a net worth ratio below 6 percent, four of which have net worth ratios below 0 percent.

Loans Topped $1 Trillion for the First Time

During the second quarter of 2018, loans at FICUs grew at an annualized rate of 12.5 percent to $1 trillion.

Almost all major loan categories were up during the second quarter. The second quarter annualized growth rates were:
  • 14.1 percent for new vehicle loans;
  • 13.7 percent for used auto loans;
  • 8.6 percent for unsecured credit card loans;
  • 10.9 percent for first lien residential loans;
  • 14 percent for second lien residential loans;
  • 15.6 percent for commercial real estate loans; and
  • 5.9 percent for non-real estate commercial loans.

Indirect loans expanded at an annual rate of 19.4 percent during the second quarter to $211.4 billion. As of June 2018, indirect loans were 21.09 percent of all loans.

FICUs originated almost $253 billion in loans through the first two quarter of 2018. A year earlier, FICUs granted $237.5 billion in loans over the first two quarters.

Deposits and shares increased by $4.2 billion to $1.2 trillion.

Because loans grew at a faster pace than shares, the loan-to-share ratio increased during the second quarter of 2018 from 80.75 percent to 82.98 percent on June 30th.

Delinquencies and Net Charge-offs Jumped During the Second Quarter

Delinquent loans increased by 5.6 percent during the second quarter to $6.7 billion. The delinquency rate on loans edged higher by 1 basis point to 0.67 percent as of June 2018; but is down from 0.75 percent from a year ago.

Net charge-offs at FICUs more than doubled during the quarter to $2.95 billion as of June 2018. The net charge-off rate on June 30th was 0.60 percent, unchanged from the first quarter of 2018.

Troubled debt restructured (TDR) loans were $8.8 billion as of June 2018, down from $8.95 billion as of March 2018.

FICUs reported almost $9.2 billion in allowance for loan and lease losses at the end of the second quarter, up from $9 billion as of March 31, 2018. FICUs had a coverage ratio (allowance for loan and lease losses divided by delinquent loans) of 136.52 percent as of June 2018.

Quarterly Credit Union Data Summary.

NCUA Chart Book.

No comments:

Post a Comment


The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.