ALEXANDRIA, Va.–New data released by NCUA for credit unions at the end of Q1 show a jump in provisions for loan losses that can be seen in net income, ROA is down nearly half from one quarter earlier, and loan and membership growth is down in every asset category except credit unions of more than $1 billion.
The data were released as part of NCUA’s Quarterly Credit Union Data Summary and are drawn from first quarter call reports.
Overall, NCUA reported that at the end of Q1 there were 5,195 federally insured credit unions with 121.4 million members.
Among the data released in the new Summary:
- Total assets in federally insured credit unions rose by $132 billion, or 8.8%, over the year ending in the first quarter of 2020, to $1.64 trillion.
- Total loans outstanding increased $68 billion, or 6.5%, over the year to $1.1 trillion. The average outstanding loan balance in the first quarter of 2020 was $15,872, up $453, or 2.9%, from one year earlier.
- The delinquency rate at federally insured credit unions was 63 basis points in the first quarter of 2020, up six basis points from one year earlier. The net charge-off ratio was 58 basis points, up slightly from 57 basis points in the first quarter of 2019.
- Insured shares and deposits rose $89 billion, or 7.5%, over the year ending in the first quarter of 2020, to $1.3 trillion.
- The loan-to-share ratio stood at 81.1% in the first quarter of 2020, down from 82.4% in the first quarter of 2019.
- The credit union system’s net worth ratio was 11.01% in the first quarter of 2020, compared with 11.13% one year earlier.
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Net income totaled $8.4 billion at an annual rate in the first quarter of 2020, down $5.6 billion, or
40.0%, from the same period a year ago. The decline was due in part to a jump in provisioning for loan and lease losses or credit loss expenses. - The net interest margin for federally insured credit unions was $47.3 billion in the first quarter of 2020, or 3.0% of average assets. That compares with $46.9 billion, or 3.2% of average assets, in the first quarter of 2019.
- The return on average assets for federally insured credit unions was 53 basis points in the first quarter of 2020, down from 95 basis points in the first quarter of 2019. The median return on average assets across all federally insured credit unions was 41 basis points, down 14 basis points from the first quarter of 2019.
- The number of federally insured credit unions declined to 5,195 in the first quarter of 2020, from 5,335 in the first quarter of 2019. In the first quarter of 2020, there were 3,255 federal credit unions and 1,940 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends.
- The number of credit unions with a low-income designation rose to 2,631 in the first quarter of 2020 from 2,571 one year earlier.
- Federally insured credit unions added 4.1 million members over the year, and credit union membership in these institutions reached 121.4 million in the first quarter of 2020.
Balance Sheet Details
Assets
- Total assets in federally insured credit unions rose by $132 billion, or 8.8%, over the year to $1.64 trillion in the first quarter of 2020.
- Cash and equivalents (assets with maturity of three months or less) increased $32.0 billion, or 24.3%, to $163.3 billion.
Investments
- Total investments (instruments with maturities in excess of three months) rose $19.5 billion, or 7.6%, to $278.1 billion.
- Investments with maturities less than or equal to one year rose $8.4 billion, or 11.1%, to $83.5 billion.
- Investments with maturities of one to three years rose $12.5 billion, or 14.4%, to $98.8 billion.
- Investments with maturities of three to five years fell $3.2 billion, or 5.5%, to $55.2 billion.
- Investments with maturities of five to 10 years declined $2.2 billion, or 6.5%, to $32.2 billion.
- Investments with maturities greater than 10 years increased $4.1 billion, or 95.8%, to $8.5 billion.
The Lending Numbers
- Total loans outstanding increased $68 billion, or 6.5%, over the year, to $1.1 trillion. Credit union loan balances rose in every major category, compared with the first quarter of 2019.
- Loans secured by 1- to 4-family residential properties increased $38.8 billion, or 8.6%, to $488.1 billion in the first quarter of 2020.
- Auto loans increased $7.9 billion, or 2.1%, to $374.3 billion. Used auto loans rose $8.8 billion, or 4.0%, to $229.3 billion. New auto loans edged down $1.0 billion, or 0.7%, to $145.0 billion.
- Credit card balances rose $3.3 billion, or 5.5%, to $64.4 billion.
- Non-federally guaranteed student loans rose $0.3 billion, or 5.4%, to $5.6 billion.
- Commercial loans, excluding unfunded commitments, increased $12.1 billion, or 16.5%, over the year to $85.1 billion in the first quarter of 2020. Commercial loans are not directly comparable to member business loans.
Delinquencies & Charge-offs
- The delinquency rate at federally insured credit unions was 63 basis points in the first quarter of 2020, up six basis points compared with the first quarter of 2019. Loan performance deteriorated somewhat in all major categories, NCUA said.
- The delinquency rate on fixed-rate real estate loans was 35 basis points in the first quarter, up slightly from 31 basis points one year earlier.
- The credit card delinquency rate rose to 137 basis points from 126 basis points in the first quarter of 2019.
- For auto loans, the delinquency rate increased to 58 basis points in the first quarter of 2020.
- The delinquency rate for commercial loans, excluding unfunded commitments, was 73 basis points in the first quarter of 2020, compared with 63 basis points in the first quarter of 2019.
- The net charge-off ratio for all federally insured credit unions was 58 basis points in the first quarter of 2020, compared with 57 basis points in the first quarter of 2019.
Liabilities and Net Worth
- Credit union shares and deposits rose by $103.3 billion, or 8.1%, over the year to $1.38 trillion in the first quarter of 2020. Regular shares increased $2.6 billion, or 0.6%, to $465.2 billion. Other deposits increased $63.1 billion, or 10.2%, to $684.1 billion, led by share certificate accounts, which were up $40.0 billion, or 15.7%.
- The credit union system’s net worth increased by $12.6 billion, or 7.5%, over the year to $180.4 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 11.01% in the first quarter of 2020, down slightly from 11.13% one year earlier.
Income Statement Details
- Net income for federally insured credit unions in the first quarter of 2020 totaled $8.4 billion at an annual rate, down $5.6 billion, or 40.0%, from the first quarter of 2019. Interest income rose $1.9 billion, or 3.3%, over the year to $61.1 billion, and non-interest income increased $0.6 billion, or 3.3%, to $20.3 billion.
- Interest expense totaled $13.8 billion annualized in the first quarter of 2020, up $1.6 billion, or 12.9%, from one year earlier.
- Non-interest expenses grew $4.5 billion, or 9.7%, over the year to $50.6 billion in the first quarter. Rising labor expenses, which were up $2.3 billion, or 9.8%, accounted for more than half of the increase in non-interest expenses.
- The aggregate net interest margin widened by $0.4 billion, or 0.8%, over the year to $47.3 billion at an annual rate in the first quarter of 2020.
- The credit union system’s provision for loan and lease losses or credit loss expense rose $2.2 billion, or 34.1%, over the year, to $8.5 billion at an annual rate in the first quarter of 2020.
Performance by Asset Category
In its analysis, NCUA again noted, “Consistent with long-running trends, credit unions with assets of at least $1 billion reported the strongest growth in loans, membership, and net worth over the year ending in the first quarter of 2020.”
- The number of federally insured credit unions with assets of at least $1 billion increased to 342 in the first quarter of 2020 from 315 in the first quarter of 2019. These 342 credit unions held $1.1 trillion in assets, or 70% of total system assets. Credit unions in this category reported loan growth of 10.9%. Membership rose 8.8%. Net worth increased 11.6%.
- The number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 253 in the first quarter of 2020 from 255 in the first quarter of 2019. These 253 credit unions held $175.7 billion in total assets, or 11% of total system assets. Credit unions in this category reported a 4.1% decline in total loans outstanding over the year. Membership fell 5.7%, and net worth decreased 2.2%.
- The number of federally insured credit unions with at least $100 million but less than $500 million in assets edged up to 1,023 in the first quarter of 2020 from 1,022 in the first quarter of 2019. These 1,023 credit unions held $228.2 billion in total assets, or 14% of total system assets. Credit unions in this category reported a 1.7% decline in total loans outstanding. Membership fell 2.8%. Net worth rose 1.4%.
- The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 672 in the first quarter of 2020 from 684 in the first quarter of 2019. These 672 credit unions held $48.5 billion in total assets, or 3% of total system assets. Credit unions in this category reported a 3.0% decrease in total loans. Membership fell 5.2%. Net worth rose 1.2%.
- The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,614 in the first quarter of 2020 from 1,682 in the first quarter of 2019. These credit unions held $41.1 billion in assets, or 3% of total system assets. Credit unions in this category reported a 4.1% decrease in loans. Membership declined 6.1%. Net worth fell 1.8%.
- The number of federally insured credit unions with less than $10 million in assets declined to 1,291 in the first quarter of 2020 from 1,377 in the first quarter of 2019. These credit unions held $5.4 billion in assets, or 0.3% of total system assets. Credit unions in this category reported a 7.2% decline in loans. Membership fell 7.7%. Net worth declined 3.4%.