CU Profitability Improved in the 2nd Quarter of 2019

The credit union industry reported net income of $7.19 billion through the first two quarter of 2019, according to the National Credit Union Administration.

A vast majority of credit unions posted a profit through mid-year 2019 with only 610 federally-insured credit unions reporting a loss through the first two quarter.

Return on average assets for federally-insured credit unions was 0.97 as of June 2019. This was up 2 basis points from the prior quarter. The median return on average assets was 0.63 percent -- this is up 7 basis points from the first quarter of 2019.

Net interest margins improved by 7 basis points during the second quarter to 3.18 percent. Non-operating income as a percent of average assets edged lower by 1 basis points between the first quarter and the second quarter to 0.06 percent. However, operating expenses as a percent of average assets rose by 4 basis points during the quarter to 3.16 percent.

At the end of June 2019, industry net worth was $171.41 billion, up from $167.78 billion at the end of March 2019. The net worth ratio for the credit union industry rose from 11.13 percent as of March 2019 to 11.27 percent as of June 2019.

At the end of June 2019, 98.42 percent of credit unions had a net worth ratio of at least 7 percent, the minimum requirement for being well-capitalized. On the other hand, 0.59 percent of credit unions or 31 credit unions had a capital ratio below 6 percent.

Assets, Loans, Shares, and Members Increase

Total assets were $1.5203 trillion at the end of the quarter, up $14.3 billion during the quarter.

Outstanding loans at credit unions were $1.0664 trillion at the end of the second quarter. This was up $18.1 billion from March 2019. All major loan categories posted a gain during the second quarter.

Shares (deposits) at credit unions increased by $7 billion during the quarter to $1.2798 trillion.

Since loan growth outpaced share growth during the second quarter of 2019, the loan-to-share ratio rose from 82.4 percent at the end of the first quarter to 83.3 percent at the end of the second quarter. The loan-to-share ratio exceeded the 10-year average of 76.32 percent.

There were 118.3 million credit union members as of June 2019, up from 117.2 million members as of March 2019.

Delinquencies Rise, Net Charge-offs Lower

Delinquent loans increased from $6 billion as of March 2019 to $6.8 billion as of June 2019. The industry's delinquent loan ratio went from 0.58 percent to 0.63 percent.

Over the same period, net charge-offs fell from $6 billion to 5.9 billion. The net charge-off rate declined by 1 basis point to 0.56 percent at the end of June 2019.

Fewer Credit Unions, But More Are Low-Income

The number of credit unions fell by 27 during the second quarter to 5,308. The number of low-income credit unions increased by 47 during the second quarter to 2,618.

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