Conserved Southern Pine Credit Union (Valdosta, GA) reported an almost 70 percent decline in its net worth during the second quarter of 2020.
Net worth fell from $8.56 million as of March 2020 to almost $2.62 million as of June 2020. The credit union's net worth ratio tumbled from 18.43 percent to 6.23 percent during the same time period.
The $42 million credit union recorded a loss of $5.94 million for the second quarter. Year-to-date, the credit union had a loss of approximately $6.4 million. Most of the second quarter loss can be attributed to $5.82 million in miscellaneous operating expenses.
The credit union's year-to-date return on average assets was negative 27.34 percent as of June 2020.
The credit union was placed into conservatorship on June 11, 2020.
Showing posts with label Credit Union Performance. Show all posts
Showing posts with label Credit Union Performance. Show all posts
Wednesday, July 29, 2020
Wednesday, July 8, 2020
Consumer Credit Shrinks at CUs in May
The economic disruption caused by the COVID-19 pandemic caused outstanding consumer credit at credit unions to fall for the month of May. However, the pace of decline slowed compared to April's pace, according to data from the Federal Reserve.
Outstanding consumer credit at credit unions declined by $5.7 billion in May to $470.4 billion.
Both revolving and nonrevolving credit fell for May.
Revolving credit slipped from $61.6 billion in April to $60.8 billion in May. This was the fifth consecutive monthly decline in revolving credit at credit unions.
Nonrevolving credit declined by $4.8 billion in May to $409.7 billion after falling by $10.2 billion in April.
Read the G.19 Report.
Outstanding consumer credit at credit unions declined by $5.7 billion in May to $470.4 billion.
Both revolving and nonrevolving credit fell for May.
Revolving credit slipped from $61.6 billion in April to $60.8 billion in May. This was the fifth consecutive monthly decline in revolving credit at credit unions.
Nonrevolving credit declined by $4.8 billion in May to $409.7 billion after falling by $10.2 billion in April.
Read the G.19 Report.
Monday, July 6, 2020
4 out of 5 FICUs Reported Positive Net Income in Q1 2020
Approximately 80 percent of all federally insured credit unions (FICUs) reported a profit for the first quarter of 2020.
At the end of 2019, 89 percent of FICUs were profitable.
The increase in provisions for loan and lease losses due to COVID-19 pandemic related economic disruption and narrower net interest margins caused fewer FICUs to report a profit in the first quarter.
First quarter call report data show that 4,175 FICUs had positive net income.
Net income and size are positively correlated.
Roughly two-thirds of credit unions with less than $10 million in assets were profitable during the first quarter of 2020. In comparison, almost 89 percent of credit unions with at least $1 billion in assets reported a profit.
The following table shows the percent of credit unions that are profitable by asset size.
At the end of 2019, 89 percent of FICUs were profitable.
The increase in provisions for loan and lease losses due to COVID-19 pandemic related economic disruption and narrower net interest margins caused fewer FICUs to report a profit in the first quarter.
First quarter call report data show that 4,175 FICUs had positive net income.
Net income and size are positively correlated.
Roughly two-thirds of credit unions with less than $10 million in assets were profitable during the first quarter of 2020. In comparison, almost 89 percent of credit unions with at least $1 billion in assets reported a profit.
The following table shows the percent of credit unions that are profitable by asset size.
Wednesday, July 1, 2020
Net Income at FICUs Fell by 40 Percent Compared to a Year Ago
Net income at federally insured credit unions (FICUs) fell by 40 percent at the end of the first quarter of 2020 compared to a year ago, according to the National Credit Union Administration.
Net income was $2.1 billion as of March 31, 2020. In comparison, net income was $3.5 billion as of March 2019.
The decline in net income was partially due to an increase in provisions for loan and lease losses. Provisions for loan and lease losses were $2.13 billion at the end of the first quarter of 2020, up from $1.6 billion at the end of the first quarter of 2019.
The return on average assets was 0.53 percent as of March 2020, down from 0.95 percent from a year earlier and 0.93 percent at the end of 2019. The median return on average assets was 0.41 percent as of March 2020, down 14 basis from the first quarter of 2019 and 19 basis points at the end of 2019.
Net interest margins at FICUs fell 16 basis points from a year ago to 2.95 percent as of the first quarter of 2020.
As of March 2020, provisions for loan and lease losses as a percent of average assets were up 10 basis points from a year ago to 0.53 percent.
Assets and Shares Post Solid Growth During First Quarter
Assets at FICUs increased by 4.6 percent during the first quarter of 2020 to $1.64 trillion.
Total shares and deposits were up 4.3 percent during the first quarter, while loans grew by just 0.8 percent over the same time period.
FICUs reported a decline in new car, credit card, and payday alternative loans during the first quarter of 2020. First mortgages, used car, and commercial loans grew during the quarter.
As a result of shares growing faster than loans, the loan to shares ratio fell from 83.95 percent as of December 2019 to 81.14 percent as of March 2020.
Most FICUs Are Well-Capitalized
Net worth at FICUs grew by 1.2 percent during the first quarter of 2020 to $180.4 billion. However, the net worth ratio fell by 36 basis points during the first quarter of 2020 to 11.01 percent. One year earlier, the net worth ratio was 11.13 percent.
Slightly more than 98 percent of FICUs had net worth ratio of at least 7 percent as of March 2020 -- the minimum requirement for being well capitalized. Three credit unions had negative net worth ratios as of March 2020.
Delinquent Loans Fell During Q1 2020
FICUs reported $7.1 billion in delinquent loans as of March 2020 -- this is down from $7.8 billion at the end of 2019. The delinquency rate fell 7 basis points during the first quarter of 2020 to 0.63 percent.
Net charge-offs were $1.6 billion as of March 2020, up from $1.5 billion from a year earlier. The net charge-off rate rose by 1 basis point from a year ago to 0.58 percent as of March 2020.
Allowance for loan and lease losses was $10.1 billion at the end of March 2020, up from $9.2 billion a year earlier. The industry's coverage ratio was 142.16 percent as of March 2020.
At the end of March 2020, 168 credit unions had a CAMEL Composite rating of 4 and 4 credit unions had a CAMEL Composite rating of 5.
At the end of March 2020, there were 5,195 FICUs, down from 5,236 FICUs at the end of 2019.
Read the quarterly data summary.
Net income was $2.1 billion as of March 31, 2020. In comparison, net income was $3.5 billion as of March 2019.
The decline in net income was partially due to an increase in provisions for loan and lease losses. Provisions for loan and lease losses were $2.13 billion at the end of the first quarter of 2020, up from $1.6 billion at the end of the first quarter of 2019.
The return on average assets was 0.53 percent as of March 2020, down from 0.95 percent from a year earlier and 0.93 percent at the end of 2019. The median return on average assets was 0.41 percent as of March 2020, down 14 basis from the first quarter of 2019 and 19 basis points at the end of 2019.
Net interest margins at FICUs fell 16 basis points from a year ago to 2.95 percent as of the first quarter of 2020.
As of March 2020, provisions for loan and lease losses as a percent of average assets were up 10 basis points from a year ago to 0.53 percent.
Assets and Shares Post Solid Growth During First Quarter
Assets at FICUs increased by 4.6 percent during the first quarter of 2020 to $1.64 trillion.
Total shares and deposits were up 4.3 percent during the first quarter, while loans grew by just 0.8 percent over the same time period.
FICUs reported a decline in new car, credit card, and payday alternative loans during the first quarter of 2020. First mortgages, used car, and commercial loans grew during the quarter.
As a result of shares growing faster than loans, the loan to shares ratio fell from 83.95 percent as of December 2019 to 81.14 percent as of March 2020.
Most FICUs Are Well-Capitalized
Net worth at FICUs grew by 1.2 percent during the first quarter of 2020 to $180.4 billion. However, the net worth ratio fell by 36 basis points during the first quarter of 2020 to 11.01 percent. One year earlier, the net worth ratio was 11.13 percent.
Slightly more than 98 percent of FICUs had net worth ratio of at least 7 percent as of March 2020 -- the minimum requirement for being well capitalized. Three credit unions had negative net worth ratios as of March 2020.
Delinquent Loans Fell During Q1 2020
FICUs reported $7.1 billion in delinquent loans as of March 2020 -- this is down from $7.8 billion at the end of 2019. The delinquency rate fell 7 basis points during the first quarter of 2020 to 0.63 percent.
Net charge-offs were $1.6 billion as of March 2020, up from $1.5 billion from a year earlier. The net charge-off rate rose by 1 basis point from a year ago to 0.58 percent as of March 2020.
Allowance for loan and lease losses was $10.1 billion at the end of March 2020, up from $9.2 billion a year earlier. The industry's coverage ratio was 142.16 percent as of March 2020.
At the end of March 2020, 168 credit unions had a CAMEL Composite rating of 4 and 4 credit unions had a CAMEL Composite rating of 5.
At the end of March 2020, there were 5,195 FICUs, down from 5,236 FICUs at the end of 2019.
Read the quarterly data summary.
Monday, June 29, 2020
NCUA Provides Update on Minority Depository Institution CUs
Minority Depository Institution (MDI) credit unions lagged behind all federally insured credit unions (FICUs) with respect to most performance metrics for 2019 except net worth ratio, according to the National Credit Union Administration (NCUA) 2019 Annual Report to Congress.
The following table looks at select performance metrics for all FICUs versus MDI CUs for 2019
Also, here is some demographic information about MDI CUs.
As of December 31, 2019, there were 514 federally insured credit unions (FICUs) with the MDI designation in 36 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Approximately 10 percent of all FICUs are MDIs.
The number of MDI credit unions declined by 16 between 2018 and 2019, mirroring the general long-term trend of consolidation in the financial services sector.
MDI credit unions tend to be smaller institutions. Eighty-seven percent reported total assets of $100 million or less at the end of 2019. Fifty-seven percent had less than $10 million in assets. The average asset size was $78.86 million.
Additionally, 79 percent of MDI credit unions had a low-income designation.
Read more.
The following table looks at select performance metrics for all FICUs versus MDI CUs for 2019
Also, here is some demographic information about MDI CUs.
As of December 31, 2019, there were 514 federally insured credit unions (FICUs) with the MDI designation in 36 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Approximately 10 percent of all FICUs are MDIs.
The number of MDI credit unions declined by 16 between 2018 and 2019, mirroring the general long-term trend of consolidation in the financial services sector.
MDI credit unions tend to be smaller institutions. Eighty-seven percent reported total assets of $100 million or less at the end of 2019. Fifty-seven percent had less than $10 million in assets. The average asset size was $78.86 million.
Additionally, 79 percent of MDI credit unions had a low-income designation.
Read more.
Thursday, June 25, 2020
Y-o-Y Loan Growth Up 71 Percent at Pentagon FCU
Lending at Pentagon Federal Credit Union (McLean, VA) grew by 71 percent during the first five months of 2020 compared to a year ago.
The credit union noted that consumer lending grew by 15 percent and mortgage lending was up 200 percent during the first five months of 2020.
Total membership growth was up 10 percent during the time period of January 2020 thru May 2020.
The credit union announced on June 25 that it topped $26 billion in assets -- two months after it surpassed $25 billion in assets.
I wonder how much of this growth was due to its open charter arising from the emergency merger of Progressive Credit Union.
Read the press release.
The credit union noted that consumer lending grew by 15 percent and mortgage lending was up 200 percent during the first five months of 2020.
Total membership growth was up 10 percent during the time period of January 2020 thru May 2020.
The credit union announced on June 25 that it topped $26 billion in assets -- two months after it surpassed $25 billion in assets.
I wonder how much of this growth was due to its open charter arising from the emergency merger of Progressive Credit Union.
Read the press release.
Friday, June 5, 2020
Consumer Credit at CUs Fell in April Due to Pandemic Economic Disruption
The Federal Reserve reported on June 5 that outstanding consumer credit at credit unions fell in April, according to its G. 19 report.
Total outstanding consumer credit declined from $489 billion in March to $476.7 billion in April, due to economic disruptions arising from COVID-19. This would translate to an annualized decline in consumer credit at credit unions of $147.4 billion.
Both revolving and nonrevolving credit at credit unions declined in April.
Revolving credit fell by $2.6 billion in April to almost $61.7 billion. This is the fourth consecutive monthly decline in outstanding revolving credit at credit unions.
Nonrevolving credit tumbled in April by $9.6 billion to approximately $415.1 billion.
Total outstanding consumer credit declined from $489 billion in March to $476.7 billion in April, due to economic disruptions arising from COVID-19. This would translate to an annualized decline in consumer credit at credit unions of $147.4 billion.
Both revolving and nonrevolving credit at credit unions declined in April.
Revolving credit fell by $2.6 billion in April to almost $61.7 billion. This is the fourth consecutive monthly decline in outstanding revolving credit at credit unions.
Nonrevolving credit tumbled in April by $9.6 billion to approximately $415.1 billion.
Wednesday, May 20, 2020
Moody's Analytics: The Road Ahead for Credit Unions
A webinar by Moody's Analytics looks at the impact of COVID-19 on credit unions.
Here are some insights from the webinar.
Moody's Analytics expects auto and unsecured balances at credit unions to decline. However, mortgage balances are expected to grow.
Credit union default rates on consumer loans will trail initial unemployment claims by six months to one year. This would mean loss rates will peak toward the end of this year or in the first half of next year.
Auto loans are an area of concern. Gross loss rates on auto loans at credit unions will peak at around 3.5 percent, which will be above loss rates during the financial crisis.
According to the webinar, loss rates on credit cards will be in unchartered territory and will come quickly, especially at the largest credit unions.
Click here to watch the webinar.
Here are some insights from the webinar.
Moody's Analytics expects auto and unsecured balances at credit unions to decline. However, mortgage balances are expected to grow.
Credit union default rates on consumer loans will trail initial unemployment claims by six months to one year. This would mean loss rates will peak toward the end of this year or in the first half of next year.
Auto loans are an area of concern. Gross loss rates on auto loans at credit unions will peak at around 3.5 percent, which will be above loss rates during the financial crisis.
According to the webinar, loss rates on credit cards will be in unchartered territory and will come quickly, especially at the largest credit unions.
Click here to watch the webinar.
Tuesday, May 19, 2020
A Snapshot of Y-o-Y Performance of the 10 Largest CUs
The 10 largest credit unions at the end of 2019 saw in aggregate increases in provisions for loan and lease losses and allowance for loan and lease losses in the first quarter of 2020 compared to a year earlier. Net income at these 10 credit unions in aggregate fell year-over-year.
These 10 credit unions accounted for almost 18 percent of the industry's assets.
In aggregate, provisions for loan and lease losses grew by 47.2 percent Boeing Employees Credit Union posted the largest year-over-year percentage change in provisions for loan and lease losses of almost 389 percent.
Net income fell by a combined 55 percent year-over-year at these 10 credit unions. two credit union reported a year-over-year increase in net income, while two credit unions posted losses in the first quarter of 2020 after posting positive earnings a year earlier. The credit union with the largest year-over-year percentage decline in net income was Alliant Credit Union of 341 percent.
Allowance for loan and lease losses grew year-over-year by a combined 19.5 percent. Alliant CU posted the largest year-over-year percentage change, followed by Pentagon FCU.
These 10 credit unions accounted for almost 18 percent of the industry's assets.
In aggregate, provisions for loan and lease losses grew by 47.2 percent Boeing Employees Credit Union posted the largest year-over-year percentage change in provisions for loan and lease losses of almost 389 percent.
Net income fell by a combined 55 percent year-over-year at these 10 credit unions. two credit union reported a year-over-year increase in net income, while two credit unions posted losses in the first quarter of 2020 after posting positive earnings a year earlier. The credit union with the largest year-over-year percentage decline in net income was Alliant Credit Union of 341 percent.
Allowance for loan and lease losses grew year-over-year by a combined 19.5 percent. Alliant CU posted the largest year-over-year percentage change, followed by Pentagon FCU.
Monday, May 18, 2020
Some CUs Could Be Hit Hard by Coronavirus Layoffs
The Wall Street Journal examined credit unions whose membership have been hit hard by the economic shutdown arising from the coronavirus.
The article noted there are a number of credit unions exposed to casinos, oil, and other industries that have been affected by coronavirus mass layoffs.
According to the Credit Union National Association, almost a third of credit unions are tied to a single employer, industry, or association. This means that these credit unions could see sudden mass layoffs in their membership.
For example, WestStar Credit Union (Las Vegas, NV) is closely tied to the Las Vegas casino industry. On March 18, all casinos were closed by an order from the governor of Nevada. The credit union reported that one in five borrowers have asked for a deferral on a car or home loan.
Provisions for loan and lease losses at WestStar went from $67,300 at the end of the first quarter in 2019 to $553,800 one year later, according to its Financial Performance Report.
Read the story (subscription required).
The article noted there are a number of credit unions exposed to casinos, oil, and other industries that have been affected by coronavirus mass layoffs.
According to the Credit Union National Association, almost a third of credit unions are tied to a single employer, industry, or association. This means that these credit unions could see sudden mass layoffs in their membership.
For example, WestStar Credit Union (Las Vegas, NV) is closely tied to the Las Vegas casino industry. On March 18, all casinos were closed by an order from the governor of Nevada. The credit union reported that one in five borrowers have asked for a deferral on a car or home loan.
Provisions for loan and lease losses at WestStar went from $67,300 at the end of the first quarter in 2019 to $553,800 one year later, according to its Financial Performance Report.
Read the story (subscription required).
Thursday, May 7, 2020
Consumer Credit at CUs Increased in March
The Federal Reserve reported on May 7 that outstanding consumer credit at credit unions grew in March, according to its G.19 report.
Outstanding consumer credit at credit unions increased by $4.1 billion in March to $489 billion.
Revolving credit at credit unions fell by $900 million in March to $64.3 billion.
However, outstanding nonrevolving credit rose by $5 billion in March to $424.7 billion.
Outstanding consumer credit at credit unions increased by $4.1 billion in March to $489 billion.
Revolving credit at credit unions fell by $900 million in March to $64.3 billion.
However, outstanding nonrevolving credit rose by $5 billion in March to $424.7 billion.
Tuesday, April 28, 2020
Harper: CUs Entered Pandemic Recession in Strong Position, But Will Be Challenged
In a speech to the Mountain West Credit Union Association’s Annual Meeting on Thursday, April 23, National Credit Union Administration Board Member Todd Harper stated that federally insured credit unions entered the pandemic-induced recession in a strong position.
At the end of 2019, the system had a net worth ratio of 11.37 percent and a delinquency rate of just 71 basis points.
However, he cautioned that credit unions will face a challenging environment.
He noted that the COVID-19 pandemic will likely lead to sizable losses in the commercial real estate portfolio at credit unions. While the industry has an overall exposure to commercial real estate of 4.8 percent of the industry's assets, those credit unions that have concentrated in commercial real estate lending will be carefully monitored by the agency.
He further stated that residential real estate comprises 31 percent of the industry's balance sheet. Credit unions should expect elevated losses from higher rates of unemployment.
Credit unions hold $380 billion in auto loans. Harper told the audience that the agency expects auto loan delinquency rates to be high to very high, but he pointed out that credit union borrowers have better than average creditworthiness.
Harper noted that credit unions with large exposure in used auto loans could be challenged as used car prices plummet. He said: "These credit unions could face unexpectedly higher losses if the borrower defaults and the actual market price of the vehicle is lower than the value of the loan."
He also commented that these credit unions could face earnings pressure as both new and used car sales fall.
Harper stated that unsecured loans accounted for 7.5 percent of the industry's assets. Unsecured loans include credit cards, private student loans, and other unsecured products. Harper warned that if people don't return to work within the next 3 months, delinquencies on unsecured loans will start to hit credit unions.
Harper also encouraged credit unions to join the Central Liquidity Facility (CLF). He stated that even if your credit union does not borrow from the CLF, your joining the CLF will ensure that the CLF has the resources to meet the liquidity needs to other credit unions that are facing liquidity issues.
Read the speech
At the end of 2019, the system had a net worth ratio of 11.37 percent and a delinquency rate of just 71 basis points.
However, he cautioned that credit unions will face a challenging environment.
He noted that the COVID-19 pandemic will likely lead to sizable losses in the commercial real estate portfolio at credit unions. While the industry has an overall exposure to commercial real estate of 4.8 percent of the industry's assets, those credit unions that have concentrated in commercial real estate lending will be carefully monitored by the agency.
He further stated that residential real estate comprises 31 percent of the industry's balance sheet. Credit unions should expect elevated losses from higher rates of unemployment.
Credit unions hold $380 billion in auto loans. Harper told the audience that the agency expects auto loan delinquency rates to be high to very high, but he pointed out that credit union borrowers have better than average creditworthiness.
Harper noted that credit unions with large exposure in used auto loans could be challenged as used car prices plummet. He said: "These credit unions could face unexpectedly higher losses if the borrower defaults and the actual market price of the vehicle is lower than the value of the loan."
He also commented that these credit unions could face earnings pressure as both new and used car sales fall.
Harper stated that unsecured loans accounted for 7.5 percent of the industry's assets. Unsecured loans include credit cards, private student loans, and other unsecured products. Harper warned that if people don't return to work within the next 3 months, delinquencies on unsecured loans will start to hit credit unions.
Harper also encouraged credit unions to join the Central Liquidity Facility (CLF). He stated that even if your credit union does not borrow from the CLF, your joining the CLF will ensure that the CLF has the resources to meet the liquidity needs to other credit unions that are facing liquidity issues.
Read the speech
Wednesday, April 22, 2020
Coronavirus Hits Navy FCU's Q1 Net Income
Navy Federal Credit Union (Vienna, VA) reported a decline in net income for the first 3 months of 2020 compared to the same time period a year ago, as the coronavirus affected its performance.
Net income fell from almost $423.6 million for the first quarter of 2019 to $245.7 million for the fist quarter of 2020 -- an almost 42 percent decline in net income from a year earlier.
The increase in provisions for loan and lease losses contributed to the decline in net income. Provisions for loan and lease losses increased by $112 million between the first quarter of 2019 and the first quarter of 2020. At the end of the first quarter of 2020, provisions for loan and lease losses were $504.5 million.
Delinquent loans increased from almost $710.9 million as of March 2019 to $958 million one year later -- a year-over-year increase of approximately 35 percent. However, loans two month or more past due were down $21.5 million from the end of 2019.
Allowance for loan and lease losses were $1.74 billion for the quarter ending March 31, 2020. As of March 31, 2019, allowance for loan and lease losses were $1.54 billion. At the end of 2019, allowance for loan and lease losses were $1.632 million.
Assets at Navy FCU surged over the last year. Assets grew by almost 22 percent to $125.7 billion at the end of the first quarter of 2020.
Loans were up by slightly less than $11.2 billion over the last year to $86.2 billion as of March 31, 2020.
The information for the first quarter of 2020 was obtained from Navy Federal Credit Union's website. Data for the first quarter of 2019 came from the credit union's Call Report at the National Credit Union Administration.
Net income fell from almost $423.6 million for the first quarter of 2019 to $245.7 million for the fist quarter of 2020 -- an almost 42 percent decline in net income from a year earlier.
The increase in provisions for loan and lease losses contributed to the decline in net income. Provisions for loan and lease losses increased by $112 million between the first quarter of 2019 and the first quarter of 2020. At the end of the first quarter of 2020, provisions for loan and lease losses were $504.5 million.
Delinquent loans increased from almost $710.9 million as of March 2019 to $958 million one year later -- a year-over-year increase of approximately 35 percent. However, loans two month or more past due were down $21.5 million from the end of 2019.
Allowance for loan and lease losses were $1.74 billion for the quarter ending March 31, 2020. As of March 31, 2019, allowance for loan and lease losses were $1.54 billion. At the end of 2019, allowance for loan and lease losses were $1.632 million.
Assets at Navy FCU surged over the last year. Assets grew by almost 22 percent to $125.7 billion at the end of the first quarter of 2020.
Loans were up by slightly less than $11.2 billion over the last year to $86.2 billion as of March 31, 2020.
The information for the first quarter of 2020 was obtained from Navy Federal Credit Union's website. Data for the first quarter of 2019 came from the credit union's Call Report at the National Credit Union Administration.
Monday, April 6, 2020
89 Percent of CUs Profitable During 2019
The National Credit Union Administration reported that 89 percent of federally-insured credit unions reported positive net income during 2019.
All credit unions with at least $1 billion in assets were profitable during 2019.
The following table shows the number and percent of credit unions that were profitable for 2019 by asset size group. There is an inverse relationship between asset size and the percent of credit unions by asset size group reporting positive net income.
The median return on average assets reached 60 basis points during 2019, up 4 basis points from a year earlier.
However, it is likely that the economic disruptions arising from COVID-19 will adversely impact the industry's profitability for this year.
All credit unions with at least $1 billion in assets were profitable during 2019.
The following table shows the number and percent of credit unions that were profitable for 2019 by asset size group. There is an inverse relationship between asset size and the percent of credit unions by asset size group reporting positive net income.
The median return on average assets reached 60 basis points during 2019, up 4 basis points from a year earlier.
However, it is likely that the economic disruptions arising from COVID-19 will adversely impact the industry's profitability for this year.
Tuesday, March 31, 2020
S&P Global: Lake Michigan CU Top Performing CU in 2019
S&P Global Market Intelligence released its annual rankings for the top performing credit unions in 2019.
S&P Global Market Intelligence ranked the nation's credit unions using five core financial performance metrics: member growth, market growth, operating expense as a percentage of operating revenue, net charge-offs as a percentage of average loans, and delinquent loans as a percentage of total loans. To be eligible for the ranking, a credit union had to report more than $500 million in total assets and a net worth ratio of at least 7.0% as of Dec. 31, 2019.
This year's top performing credit union was Lake Michigan Credit Union (Byron Center, MI). The credit union outperformed the industry median in all five ranking metrics allowing it to surpass its 2018 second place ranking.
MidFlorida Credit Union (Lakeland, FL) was the second ranked credit union. S&P Global Market Intelligence cited that the credit union benefits from its merger and acquisition activity in 2019, including the acquisition of the Florida assets of First American Bank (Fort Dodge, IA) and Community Bank and Trust of Florida.
Rounding out the top 5 were Stanford Federal Credit Union (Palo Alto, CA), Idaho Central Credit Union (Chubbuck, ID), and Eastman Credit Union (Kingsport, TN).
Read more.
S&P Global Market Intelligence ranked the nation's credit unions using five core financial performance metrics: member growth, market growth, operating expense as a percentage of operating revenue, net charge-offs as a percentage of average loans, and delinquent loans as a percentage of total loans. To be eligible for the ranking, a credit union had to report more than $500 million in total assets and a net worth ratio of at least 7.0% as of Dec. 31, 2019.
This year's top performing credit union was Lake Michigan Credit Union (Byron Center, MI). The credit union outperformed the industry median in all five ranking metrics allowing it to surpass its 2018 second place ranking.
MidFlorida Credit Union (Lakeland, FL) was the second ranked credit union. S&P Global Market Intelligence cited that the credit union benefits from its merger and acquisition activity in 2019, including the acquisition of the Florida assets of First American Bank (Fort Dodge, IA) and Community Bank and Trust of Florida.
Rounding out the top 5 were Stanford Federal Credit Union (Palo Alto, CA), Idaho Central Credit Union (Chubbuck, ID), and Eastman Credit Union (Kingsport, TN).
Read more.
Tuesday, March 24, 2020
CUs in 22 States and DC Had Negative Median Membership Growth in 2019
At least half of the federally-insured credit unions in 22 states and the District of Columbia reported a decline in membership for 2019, according to the National Credit Union Administration.
At the median, credit union membership declined the most in Pennsylvania at minus 1.2 percent for 2019, followed by credit unions in Arkansas at negative 1 percent.
The data show that there is a positive relationship between median state membership growth and median state deposit (share) growth in 2019. The R-squared is 0.4793. This indicates that almost half of the observed variation in median state share growth can be explained by median state membership growth. (click on image to enlarge)
Nationally, year-over-year membership growth at the median credit union was unchanged for 2019.
Most credit unions that reported a year-over-year decline in membership tend to be small with over 70 percent of the credit unions reporting a decline in membership have less than $50 million in assets.
Read more.
At the median, credit union membership declined the most in Pennsylvania at minus 1.2 percent for 2019, followed by credit unions in Arkansas at negative 1 percent.
The data show that there is a positive relationship between median state membership growth and median state deposit (share) growth in 2019. The R-squared is 0.4793. This indicates that almost half of the observed variation in median state share growth can be explained by median state membership growth. (click on image to enlarge)
Nationally, year-over-year membership growth at the median credit union was unchanged for 2019.
Most credit unions that reported a year-over-year decline in membership tend to be small with over 70 percent of the credit unions reporting a decline in membership have less than $50 million in assets.
Read more.
Wednesday, March 11, 2020
Fee Income at Civic FCU Was $886 Per Member for 2019
A reader recently pointed out that Civic Federal Credit Union (Raleigh, NC) is reporting fee income from services of almost $886 per member for 2019.
Fee income from services include overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees, safekeeping fees, etc.
According to the credit union's December 2019 Call Report, it had $601,678 in fee income from 679 members.
Its fee income per member was the second highest among all credit unions -- only topped by North Bay Credit Union (Santa Rosa, CA) at $936.25 per member.
The credit union's fee income per member is well above the industry's standards.
The average fee income per member for the industry was $57.05. The median fee income per member was $49.56.
Additionally, fee income for 2019 as a percent of assets was 1.42 percent. In comparison, the industry average for 2019 was 0.66 percent with the median fee income to asset ratio of 0.52 percent.
Civic FCU's fee income as a percent of assets is in the industry's top quartile.
This credit union was chartered in December 2017 by the National Credit Union Administration for the purpose of making member business loans. It is possible that the credit union's business model accounts for the higher fee income per member.
Fee income from services include overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees, safekeeping fees, etc.
According to the credit union's December 2019 Call Report, it had $601,678 in fee income from 679 members.
Its fee income per member was the second highest among all credit unions -- only topped by North Bay Credit Union (Santa Rosa, CA) at $936.25 per member.
The credit union's fee income per member is well above the industry's standards.
The average fee income per member for the industry was $57.05. The median fee income per member was $49.56.
Additionally, fee income for 2019 as a percent of assets was 1.42 percent. In comparison, the industry average for 2019 was 0.66 percent with the median fee income to asset ratio of 0.52 percent.
Civic FCU's fee income as a percent of assets is in the industry's top quartile.
This credit union was chartered in December 2017 by the National Credit Union Administration for the purpose of making member business loans. It is possible that the credit union's business model accounts for the higher fee income per member.
Friday, March 6, 2020
Consumer Credit at CUs Barely Grows in January 2020
The Federal Reserve reported on March 6 that outstanding consumer credit at credit unions barely grew in January 2020, according to its G.19 report.
Total outstanding credit at credit unions was $482.5 billion in January 2020, up slightly from $482.4 billion in December 2019.
Between December 2019 and January 2020, revolving credit unions fell by almost $1.9 billion to $65.9 billion.
Nonrevolving credit increased by almost $1.9 billion during January 2020 to approximately $416.6 billion -- reversing a three consecutive month decline.
Total outstanding credit at credit unions was $482.5 billion in January 2020, up slightly from $482.4 billion in December 2019.
Between December 2019 and January 2020, revolving credit unions fell by almost $1.9 billion to $65.9 billion.
Nonrevolving credit increased by almost $1.9 billion during January 2020 to approximately $416.6 billion -- reversing a three consecutive month decline.
Thursday, March 5, 2020
FICUs Post Solid Performance for 2019
The National Credit Union Administration is reporting that federally insured credit union (FICU) assets grew by 7.8 percent in 2019 to $1.57 trillion.
Total loans were up 6.2 percent year-over-year to $1.1 trillion.
Shares and deposits at FICUs grew by 8.2 percent in 2019 to $1.32 trillion.
Due to shares (deposits) growing faster than loans, the loan-to-share ratio fell from 85.6 percent at the end of 2018 to 84 percent at the end of 2019.
Membership in FICUs increased by 4.2 million members during 2019 to 120.4 million as of the end of the fourth quarter 2019.
Net Income Rose by 8.8 Percent in 2019
FICUs reported a net income of $14.1 billion for 2019 -- up 8.8 percent from 2018.
During 2019, total interest income was up 13.4 percent, provisions for loan and lease losses or total credit loss expenses fell by less than 1 percent, interest expense jumped by 38.4 percent, non-interest income increased by 7.3 percent, and non-interest expense rose by 8.7 percent.
The industry's return on average assets was 94 basis points at the end of 2019, which was up 2 basis points from a year ago. The median return on average assets rose by 4 basis points in 2019 to 60 basis points.
Factors contributing to the year-over-year improvement in return on average assets were higher net interest margins, a decline in provisions for loan and lease losses, and higher non-operating income. Factors that negatively affected return on average assets were lower fee and other income and higher operating expenses.
FICU Net Worth Ratio Up from a Year Ago
The industry's net worth increased by 8.5 percent in 2019 to $178.3 billion on the growth in net income.
Secondary capital and subordinated debt counting as net worth increased by 14 percent in 2019 to $301 million at the end of 2019.
The industry's aggregate net worth ratio grew by 7 basis points during 2019 to 11.37 percent as of December 2019.
The vast majority (98.55 percent) of all FICUs have a net worth ratio of at least 7 percent of assets. Only 37 credit unions have a net worth ratio below 6 percent with 3 credit unions having a net worth ratio below 2 percent.
Delinquency Rate Unchanged from a Year Ago, Net Charge-Off Rate Slightly Lower
Total delinquent loans were $7.85 billion at the end of 2019 -- up from $7.3 billion at the end of the third quarter of 2019 and $7.4 billion at the end of 2018. The percent of loans 60 days or more past due were unchanged at 0.71 percent as of December 2019 from a year ago; but up from 0.67 percent at the end of the third quarter of 2019.
Net charge-offs were up 5.02 percent for 2019 to $6.05 billion. The net charge-off rate as of December 2019 was 0.56 percent -- down 2 basis points from a year ago, but up 1 basis points from the prior quarter.
Allowances for loan and lease losses increased by 3.2 percent during 2019 to almost $9.57 billion. The industry's coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 121.83 percent at the end of 2019, down from 124.78 percent at the end of 2018.
Large CUs Outperform Smaller CUs
FICUs with at least $1 billion in assets reported the strongest growth in loans, net worth, and membership in 2019, while FICUs with less than $500 million in assets recorded declines in those categories over the year.
Read Data Summary.
View Financial Trends Chart Book.
Total loans were up 6.2 percent year-over-year to $1.1 trillion.
Shares and deposits at FICUs grew by 8.2 percent in 2019 to $1.32 trillion.
Due to shares (deposits) growing faster than loans, the loan-to-share ratio fell from 85.6 percent at the end of 2018 to 84 percent at the end of 2019.
Membership in FICUs increased by 4.2 million members during 2019 to 120.4 million as of the end of the fourth quarter 2019.
Net Income Rose by 8.8 Percent in 2019
FICUs reported a net income of $14.1 billion for 2019 -- up 8.8 percent from 2018.
During 2019, total interest income was up 13.4 percent, provisions for loan and lease losses or total credit loss expenses fell by less than 1 percent, interest expense jumped by 38.4 percent, non-interest income increased by 7.3 percent, and non-interest expense rose by 8.7 percent.
The industry's return on average assets was 94 basis points at the end of 2019, which was up 2 basis points from a year ago. The median return on average assets rose by 4 basis points in 2019 to 60 basis points.
Factors contributing to the year-over-year improvement in return on average assets were higher net interest margins, a decline in provisions for loan and lease losses, and higher non-operating income. Factors that negatively affected return on average assets were lower fee and other income and higher operating expenses.
FICU Net Worth Ratio Up from a Year Ago
The industry's net worth increased by 8.5 percent in 2019 to $178.3 billion on the growth in net income.
Secondary capital and subordinated debt counting as net worth increased by 14 percent in 2019 to $301 million at the end of 2019.
The industry's aggregate net worth ratio grew by 7 basis points during 2019 to 11.37 percent as of December 2019.
The vast majority (98.55 percent) of all FICUs have a net worth ratio of at least 7 percent of assets. Only 37 credit unions have a net worth ratio below 6 percent with 3 credit unions having a net worth ratio below 2 percent.
Delinquency Rate Unchanged from a Year Ago, Net Charge-Off Rate Slightly Lower
Total delinquent loans were $7.85 billion at the end of 2019 -- up from $7.3 billion at the end of the third quarter of 2019 and $7.4 billion at the end of 2018. The percent of loans 60 days or more past due were unchanged at 0.71 percent as of December 2019 from a year ago; but up from 0.67 percent at the end of the third quarter of 2019.
Net charge-offs were up 5.02 percent for 2019 to $6.05 billion. The net charge-off rate as of December 2019 was 0.56 percent -- down 2 basis points from a year ago, but up 1 basis points from the prior quarter.
Allowances for loan and lease losses increased by 3.2 percent during 2019 to almost $9.57 billion. The industry's coverage ratio (allowance for loan and lease losses divided by delinquent loans) was 121.83 percent at the end of 2019, down from 124.78 percent at the end of 2018.
Large CUs Outperform Smaller CUs
FICUs with at least $1 billion in assets reported the strongest growth in loans, net worth, and membership in 2019, while FICUs with less than $500 million in assets recorded declines in those categories over the year.
Read Data Summary.
View Financial Trends Chart Book.
Sunday, January 26, 2020
Navy FCU Reported Earnings of $1.64 Billion for 2019
Navy Federal Credit Union (Vienna, VA), the largest credit union in the world, reported net income of $1.64 billion for 2019. In comparison, the $112 billion credit union had a profit of $1.28 billion for 2018.
Navy FCU had total interest revenues of almost $6.27 billion and non-interest revenues of $1.7 billion for 2019.
Operating expenses were $3.25 billion. Dividends were slightly above $1 billion, while non-operating expenses were just shy of $2.1 billion.
Read the Statement of Income.
Navy FCU had total interest revenues of almost $6.27 billion and non-interest revenues of $1.7 billion for 2019.
Operating expenses were $3.25 billion. Dividends were slightly above $1 billion, while non-operating expenses were just shy of $2.1 billion.
Read the Statement of Income.
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