CU Assets Topped $2.25 Trillion at Year-End 2023; Smallest CUs Lead in Loan Growth, But Membership Down in Almost All Asset Categories

ALEXANDRIA, Va.–Newly released credit union financial performance data from NCUA show total assets in federally insured credit unions rose by $88 billion, or 4.1%, to $2.26 trillion during 2023, but membership declined in every category below $1 billion in assets.

In addition, the agency said that in a break with long-running trends, credit unions with less than $10 million in assets reported the strongest growth in loans and net worth over the year ending on Dec. 31.

NCUA said “financial strains” are evident in the year-end numbers, and reported that the delinquency rate at federally insured credit unions was 83 basis points in the fourth quarter of 2023, up 21 basis points from one year earlier.

‘Must Remain Diligent’

“The credit union system remains largely stable in its performance and remains resilient against a challenging interest rate and economic environment,” Chairman Todd M. Harper said in a statement. “However, the NCUA continues to see signs of financial strain on credit union balance sheets, along with growing consumer financial stress as reflected in the rising delinquency rate shown in the latest data. Credit union executives, administrators, and boards of directors must remain diligent in managing the safety-and-soundness and consumer financial protection risks within their institutions. Today’s marketplace requires active — not passive — management by all.”

Performance Highlights

The data, drawn from NCUA’s Quarterly Data Summary Report for the fourth quarter of 2023, include:

Balance Sheet Details

Assets

• Total assets in federally insured credit unions rose by $88.1 billion, or 4.1%, over the year to $2.26 trillion in the fourth quarter of 2023.
• Cash increased by $30.1 billion, or 23.1%, to $160.4 billion. Note that the 2022Q1 Call Report redefined cash to exclude cash equivalents (investments with original maturities of three months or less). Cash now represents cash on hand and cash on deposit, NCUA said.
• Total investments fell $38.3 billion, or 8.8%, over the year to $397.3 billion in the fourth quarter of 2023. NCUA said CUs should note the 2022Q1 Call Report introduced a new definition for total investments on the investment maturity schedule.
• Investments with maturities less than or equal to one year rose $8.5 billion, or 9.5%, to $98.4 billion.
• Investments with maturities of one to three years declined $7.8 billion, or 6.8%, to $106.9 billion.
• Investments with maturities of three to five years fell $19.3 billion, or 20.4%, to $75.3 billion.
• Investments with maturities of five to 10 years declined $20.0 billion, or 17.4%, to $95.4 billion.
• Investments with maturities greater than 10 years increased $0.3 billion, or 1.4%, to $21.4 billion.
• Total loans outstanding increased $96.2 billion, or 6.4%, over the year to $1.60 trillion. NCUA said CUs should that the 2022Q1 Call Report redefined the loans variable to include loans to natural person credit unions, which were previously reported as investments.
• Credit union loan balances rose in most major categories, compared with the fourth quarter of 2022.Loans secured by 1- to 4-family residential properties increased $48.4 billion, or 7.3%, to $708.1 billion in the fourth quarter of 2023.
• Auto loans increased $12.7 billion, or 2.6%, to $498.2 billion. Used auto loans rose $10.7 billion, or 3.4%, to $322.8 billion, and new auto loans rose $2.0 billion, or 1.1%, to $175.4 billion.
• Credit card balances grew by $7.8 billion, or 10.5%, to $82.0 billion.
• Non-federally guaranteed student loans edged down $0.2 billion, or 2.2%, to $7.3 billion.
• Commercial loans excluding unfunded commitments increased $18.2 billion, or 13.1%, over the year to $157.2 billion in the fourth quarter of 2023.
• The delinquency rate at federally insured credit unions was 83 basis points in the fourth quarter of 2023, up 21 basis points compared with the fourth quarter of 2022.The delinquency rate on non-commercial real estate loans was 56 basis points in the fourth quarter of 2023, 13 basis points higher than in the fourth quarter of 2022, NCUA said.
• The credit card delinquency rate rose to 211 basis points from 148 basis points one year earlier.
• The auto loan delinquency rate increased 23 basis points over the year to 90 basis points in the fourth quarter of 2023.
• The delinquency rate for commercial loans excluding unfunded commitments was 61 basis points in the fourth quarter of 2023, up 28 basis points from a year earlier.
• The net charge-off ratio for all federally insured credit unions was 61 basis points in the fourth quarter of 2023, up 27 basis points compared with the fourth quarter of 2022.

Liabilities and Net Worth

• Total shares and deposits rose by $31.2 billion, or 1.7%, over the year to $1.88 trillion in the fourth quarter of 2023. Regular shares declined by $87.8 billion, or 13.4%, to $569.0 billion. Other deposits increased by $131.6 billion, or 16.2%, to $942.6 billion, led by share certificate accounts, which grew $187.1 billion, or 63.1%, over the year to $483.9 billion.
• The credit union system’s net worth increased by $8.7 billion, or 3.8%, over the year to $241.5 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.70% in the fourth quarter of 2023, down from 10.74% one year earlier. NCUA reminded that beginning in 2023 Q1, this ratio excludes the CECL transition provision.
• The net worth ratio for prompt corrective action was 10.95% in the fourth quarter of 2023. NCUA reminded the ratio considers the CECL Transition Provision, as applicable. The calculation can be found on Schedule G of the 5300 Call Report; see Account 998.

Income statement Details

• Net income for federally insured credit unions in 2023 totaled $15.2 billion, down $3.5 billion, or 18.8%, from 2022. Interest income rose $26.6 billion, or 37.3%, over the year to $98.1 billion. Non-interest income rose $1.2 billion, or 4.9%, to $25.0 billion, largely reflecting an increase in other non-interest income, NCUA said.
• Interest expense totaled $31.4 billion in 2023, up $20.5 billion, or 188.3%, from one year earlier. Non-interest expense grew $5.0 billion, or 8.3%, over the year to $65.2 billion in 2023. Rising employee compensation and benefits, which were up $2.6 billion, or 8.4%, over the year, accounted for more than half of the increase in non-interest expenses.
• The aggregate net interest margin widened by $6.1 billion, or 10.1%, over the year to $66.6 billion in 2023.
• The credit union system’s provision for loan and lease losses or credit loss expense increased $5.8 billion, or 105.9%, to $11.3 billion in 2023.

Performance by Asset Category

• NCUA noted that in a break with long-running trends, credit unions with less than $10 million in assets reported the strongest growth in loans and net worth over the year ending in the fourth quarter of 2023. Credit unions with assets of at least $1 billion continued to report the strongest membership growth.
• The number of federally insured credit unions with assets of at least $1 billion increased to 432 in the fourth quarter of 2023 from 421 in the fourth quarter of 2022. These 432 credit unions held $1.7 trillion in assets, or 77% of total system assets. Credit unions in this category reported loan growth of 7.8% over the year. Membership rose 5.2%. Net worth increased 4.5%.
• The number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 282 in the fourth quarter of 2023 from 288 in the fourth quarter of 2022. These 282 credit unions held $204.9 billion in total assets, or 9% of total system assets. Credit unions in this category reported a 0.3% decline in total loans outstanding over the year. Membership declined 3.8%, and net worth fell by 1.5%, NCUA said.
• The number of federally insured credit unions with at least $100 million but less than $500 million in assets declined to 1,059 in the fourth quarter of 2023 from 1,070 in the fourth quarter of 2022. These 1,059 credit unions held $241.7 billion in total assets, or 11% of total system assets. Credit unions in this category reported a 3.6% increase in total loans outstanding over the year. Membership edged down 0.5%, while net worth rose 4.1%.
• The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 629 in the fourth quarter of 2023 from 657 one year earlier. These 629 credit unions held $45.5 billion in total assets, or 2% of total system assets. Credit unions in this category reported a 0.3% increase in total loans over the year. Membership declined 3.5%. Net worth rose 2.8%.
• The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,275 in the fourth quarter of 2023 from 1,357 in the fourth quarter of 2022. These credit unions held $33.6 billion in assets, or 1.5% of total system assets. Credit unions in this category reported a 2.9% increase in loans over the year. Membership declined 5.2%, while net worth rose 0.6%.
• The number of federally insured credit unions with less than $10 million in assets declined to 927 in the fourth quarter of 2023 from 967 in the fourth quarter of 2022. These credit unions held $3.9 billion in assets, or 0.2% of total system assets. Credit unions in this category reported an 8.2% increase in loans over the year. Membership declined 2.0%. Net worth grew 5.2%.

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