FICUs Report Weak Loan Growth in Q1

National Credit Union Administration reported that federally insured credit unions (FICUs) had strong share (deposit) growth in the first quarter of 2019, but weak loan growth.

Assets at FICUs expanded by 3.6 percent during the first quarter to $1.51 trillion. The number of FICUs fell by 40 during the quarter to 5,335.

Total loans grew by 0.4 percent during the first quarter of 2019 to $1.048 trillion. The following loans contracted during the first quarter -- credit card loans, other unsecured loans, Payday Alternative loans, new vehicle loans, and commercial loans not secured by real estate.

However, total shares and deposits increased by 4,4 percent during the quarter to $1.273 trillion as of March 31, 2018.

As a result of shares growing faster than loans, the loan to share fell from 85.56 percent at the end of 2018 to 82.36 percent at the end of the first quarter of 2019.

Return on Average Assets Up in Q1 2019

Net income for FICUs credit unions was $3.5 billion for the first quarter of 2019. Over the last year, net income was $14.1 billion, which was up 11.9 percent.

The return on average assets (ROAA) was 0.95 percent, 3 basis points higher than the ROAA at the end of 2018. The median ROAA was 56 basis points, down 1 basis point from the end of 2018.

Factors contributing to the improvement in ROAA during the first quarter were lower operating expenses (+3 basis points), provisions for loan and lease losses (+3 basis points), and non-operating income (+5 basis points). Factors negatively impacting ROAA were net interest margins (-2 basis points) and fee and other income (-6 basis points).

Net Worth Up, New Worth Ratio Fell

Net worth of FICUs grew by 2.1 percent during the quarter to $167.8 billion.

Secondary capital at credit unions expanded by 4.7 percent during the first quarter to $277.2 million.

Because assets grew at a faster pace than net worth, the net worth ratio for the industry fell by 16 basis points to 11.14 percent.

As of March 2019, 98.35 percent of FICUs had a net worth ratio of 7 percent or higher (the minimum requirement for being well capitalized). The number of FICUs that were undercapitalized at the end of the first quarter of 2019 was 34, up from 30 at the end of 2018.

Asset Quality Improved

Delinquent loans at FICUs fell by 18.4 percent during the quarter to $6.1 billion as of March 31, 2019. At the end of the first quarter of 2019, the delinquent loan ratio was 0.58 percent, down from 0.71 percent at the end of 2018.

Net charge-offs were $1.5 billion at the end of the first quarter of 2019. The net charge-off rate was down 1 basis point at the end of the first quarter of 2019 at 0.57 percent.

Allowances for loan and lease losses was $9.24 billion, down 0.3 percent from the end of 2018. However, the industry's coverage ratio rose during the first quarter to 152.59 percent as of March 2019, up from 124.83 percent as of December 2018.

Financial Trends Report.

Quarterly Data Summary.