Friday, June 3, 2016

FICUs Post Strong Year-over-Year Loan Growth

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

According to the agency, loans grew by 10.7 percent at FICUs between the first quarter of 2015 and the first quarter of 2016. Every major loan category as of March 2016 expanded over the last year.
  • New auto loans jumped 15.4 percent to $103.0 billion.
  • Used auto loans rose 13.2 percent to $166.8 billion.
  • Total first-mortgage loans outstanding grew 10.4 percent to $327.9 billion.
  • Other real estate loans grew by 3.9 percent to $74.3 billion.
  • Net member-business loan balances increased 13 percent to $59.8 billion.
  • Non-federally guaranteed student loans expanded 10.9 percent to $3.6 billion
  • .Payday alternative loans originated at federal credit unions rose 8.1 percent to $106.1 million at an annual rate.
The loan-to-share ratio rose to 76.1 percent, up 2.7 percentage points from a year earlier; but fell for the quarter due to strong deposit growth in the first quarter. According to NCUA, shares (deposits) grew at an annualized rate of 13.76 percent during the first quarter of 2016.

Delinquencies and Charge-offs Rise

NCUA reported that FICUs had almost $5.7 billion in loans that were 60 days for more past due as of March 2016 -- up from $4.9 billion a year earlier.

The delinquency rate at federally insured credit unions was 71 basis points in the first quarter, up 2 basis points from a year earlier; but down 10 basis points from December 2015. The delinquency rate for member business loans rose by 32 basis points during the quarter to 141 basis points on March 31.

FICUs had net charge-offs of $1 billion at the end of the first quarter of 2016 -- up almost 23 percent from a year go. The system’s net charge-off ratio increased slightly to an annualized 52 basis points in the first quarter, up from 47 basis points at the end of the first quarter of 2015.

Net Income Rises Year-over-Year

Federally insured credit unions reported net income of $2.3 billion for the first quarter. In comparison, FICUs reported net income of $2.2 billion for the first quarter of 2015.

The annualized return on average assets (ROAA) ratio for federally insured credit unions stood at 75 basis points the first quarter in 2016 -- unchanged from the end of 2015; but down 3 basis points from a year earlier. According to NCUA, higher net interest margin and non-operating income and lower operating expenses positively contributed to ROAA during the first quarter, while higher provisions for loan and lease losses and lower fee income negatively impacted ROAA.

Credit Unions Remain Well-Capitalized

The percentage of federally insured credit unions that were well capitalized remained steady in the first quarter with 97.8 percent reporting a net worth ratio at or above the statutorily required 7 percent. At end of first quarter of 2016, 40 federally insured credit unions were less than adequately capitalized, up from 35 FICUs at the end of 2015.

Overall, the credit union system’s aggregate net worth ratio was 10.78 percent at the end of the first quarter, down 3 basis points from a year earlier and 14 basis points from the end of 2015.

Large CUs Perform Better than Small CUs

NCUA noted that credit unions with at least $500 million in assets performed better than smaller credit unions, as large credit unions recorded the fastest growth in loans, membership and net worth, as well as the highest return on average assets.

Read the press release.

Read financial trends.

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