ALEXANDRIA, Va.–Federally insured credit unions during 2019 grew total assets by $113 billion (7.8%), loans by $64 billion (6.2%) and membership was up by 4.2 million, according to NCUA’s Quarterly Credit Union Data Summary for Q4 2019.
Credit unions also showed improvements in net interest margins and ROA. But CUs in the smallest asset categories once again showed declines in lending and membership.
The data is based on call reports from 5,236 federally insured CUs, representing approximately 120.4 million members.
According to the report, here’s how credit unions performed during Q4 and 2019:
- Total assets in federally insured credit unions rose by $113 billion, or 7.8%, over the year ending in the fourth quarter of 2019, to $1.57 trillion.
- Total loans outstanding increased $64 billion, or 6.2%, over the year to $1.1 trillion. The average outstanding loan balance in the fourth quarter of 2019 was $15,669, up $371, or 2.4%, from one year earlier.
- The delinquency rate at federally insured credit unions was 71 basis points in the fourth quarter of 2019, unchanged from one year earlier. The net charge-off ratio was 56 basis points, down slightly from 58 basis points in the fourth quarter of 2018.
- Insured shares and deposits rose $85 billion, or 7.4%, over the four quarters of 2019 to $1.2 trillion.
- The loan-to-share ratio stood at 84.0% in the fourth quarter of 2019, down from 85.6% in the fourth quarter of 2018.
- The credit union system’s net worth ratio was 11.37% in the fourth quarter of 2019, compared with 11.30% one year earlier.
- Net income totaled $14.1 billion at an annual rate in the fourth quarter of 2019, up $1.1 billion, or 8.8%, from the same period a year ago.
- The net interest margin for federally insured credit unions was $47.8 billion in the fourth quarter of 2019, or 3.2% of average assets. That compares with $44.3 billion, or 3.1% of average assets, in the fourth quarter of 2018.
- The return on average assets for federally insured credit unions was 94 basis points over the year ending in the fourth quarter of 2019, up from 92 basis points in the fourth quarter of 2018. The median return on average assets across all federally insured credit unions was 60 basis points, up 4 basis points from the fourth quarter of 2018.
- The number of federally insured credit unions declined to 5,236 in the fourth quarter of 2019, from 5,375 in the fourth quarter of 2018. In the fourth quarter of 2019, there were 3,283 federal credit unions and 1,953 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends, NCUA said.
- The number of credit unions with a low-income designation rose to 2,605 in the fourth quarter of 2019 from 2,554 one year earlier.
- Federally insured credit unions added 4.2 million members over the year, and credit union membership in these institutions reached 120.4 million in the fourth quarter of 2019.
Balance Sheet Details
According to the NCUA data, here are more granular results for credit union performance:
Assets
- Total assets in federally insured credit unions rose by $113 billion, or 7.8%, over the year to $1.57 trillion in the fourth quarter of 2019.
- Cash and equivalents (assets with maturity of three months or less) increased $28.6 billion, or 30.9%, to $121.3 billion.
- Total investments (instruments with maturities in excess of three months) rose $9.9 billion, or 3.9%, to $263.2 billion. That includes:
- Investments with maturities of less than one year rose $7.3 billion, or 10.1%, to $79.7 billion.
- Investments with maturities of one to three years rose $5.6 billion, or 6.5%, to $91.8 billion.
- Investments with maturities of three to five years fell $4.6 billion, or 7.8%, to $54.7 billion.
- Investments with maturities of five to 10 years declined $0.2 billion, or 0.6%, to $31.4 billion.
- Investments with maturities greater than 10 years increased $1.8 billion, or 45.7%, to $5.7 billion.
Lending
Total loans outstanding increased $64 billion, or 6.2%, over the year, to $1.1 trillion. Credit union loan balances rose over the year in every major category, compared with the fourth quarter of 2018. That includes:
- Loans secured by 1- to 4-family residential properties increased $33.4 billion, or 7.5%, to $480.3 billion in the fourth quarter of 2019.
- Auto loans increased $9.2 billion, or 2.5%, to $375.1 billion. Used auto loans rose $8.8 billion, or 4.0%, to $227.5 billion. New auto loans edged up $0.4 billion, or 0.3%, to $147.6 billion.
- Credit card balances rose $4.2 billion, or 6.8%, to $66.0 billion
- Non-federally guaranteed student loans rose $0.4 billion, or 7.4%, to $5.5 billion.
- Commercial loans, excluding unfunded commitments, increased $10.9 billion, or 15.3%, over the year to $81.8 billion in the fourth quarter of 2019. Commercial loans are not directly comparable to member business loans.
- The delinquency rate at federally insured credit unions was 71 basis points in the fourth quarter of 2019, unchanged compared with the fourth quarter of 2018. Loan performance was mixed across major categories:
- The delinquency rate on fixed-rate real estate loans was 42 basis points in the fourth quarter, down slightly from 44 basis points one year earlier.
- The credit card delinquency rate rose to 140 basis points from 135 basis points in the fourth quarter of 2018.
- For auto loans, the delinquency rate edged down one basis point to 65 basis points in the fourth quarter of 2019.
- The delinquency rate for commercial loans, excluding unfunded commitments, declined to 63 basis points in the fourth quarter of 2019, from 67 basis points in the fourth quarter of 2018.
- The net charge-off ratio for all federally insured credit unions was 56 basis points in the fourth quarter of 2019, compared with 58 basis points in the fourth quarter of 2018.
Liabilities and Net Worth
- Credit union shares and deposits rose by $100.0 billion, or 8.2%, over the year to $1.32 trillion in the fourth quarter of 2019. Regular shares increased $15.0 billion, or 3.5%, to $444.6 billion. Other deposits increased $67.2 billion, or 11.2%, to $667.2 billion, led by share certificate accounts, which were up $48.9 billion, or 20.5%.
- The credit union system’s net worth increased by $14.0 billion, or 8.5%, over the year to $178.3 billion. The aggregate net worth ratio — net worth as percentage of assets — stood at 11.37% in the fourth quarter of 2019, up from 11.30% one year earlier.
Income Statement Details
According to the NCUA report:
- Net income for federally insured credit unions in the fourth quarter of 2019 totaled $14.1 billion at an annual rate, up $1.1 billion, or 8.8%, from the fourth quarter of 2018. Interest income rose $7.2 billion, or 13.4%, over the year to $61.3 billion, and non-interest income increased $1.4 billion, or 7.3%, to $21.2 billion.
- Interest expense totaled $13.5 billion annualized in the fourth quarter of 2019, up $3.7 billion, or 38.4%, from one year earlier.
- Non-interest expenses grew $3.9 billion, or 8.7%, over the year to $48.4 billion in the fourth quarter. Rising labor expenses, which were up $2.3 billion, or 10.0%, accounted for more than half of the increase in non-interest expenses, NCUA said.
- The aggregate net interest margin widened by $3.5 billion, or 7.9%, over the year to $47.8 billion at an annual rate in the fourth quarter of 2019.
- The credit union system’s provision for loan and lease losses or credit loss expense edged down $0.05 billion, or 0.8%, over the year, to $6.5 billion at an annual rate in the fourth quarter of 2019.
Performance by Asset Category
In its analysis, NCUA once 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 fourth quarter of 2019. Credit unions with less than $500 million in assets reported declines in those categories over the year.
Specifically:
- The number of federally insured credit unions with assets of at least $1 billion increased to 330 in the fourth quarter of 2019 from 308 in the fourth quarter of 2018. These 330 credit unions held $1.1 trillion in assets, or 68% of total system assets. Credit unions in this category reported loan growth of 9.7%. Membership rose 8.4%. Net worth increased 12.4%.
- The number of federally insured credit unions with assets of at least $500 million but less than $1 billion rose to 247 in the fourth quarter of 2019 from 237 in the fourth quarter of 2018. These 247 credit unions held $172.7 billion in total assets, or 11% of total system assets. Credit unions in this category reported a 1.9% increase in total loans outstanding over the year. Membership rose 0.3%, and net worth increased 3.3%.
- The number of federally insured credit unions with at least $100 million but less than $500 million in assets declined to 1,018 in the fourth quarter of 2019 from 1,026 in the fourth quarter of 2018. These 1,018 credit unions held $227.8 billion in total assets, or 15% of total system assets. Credit unions in this category reported a 3.0% decline in total loans outstanding. Membership fell 4.6%. Net worth edged up 0.6%.
- The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 677 in the fourth quarter of 2019 from 688 in the fourth quarter of 2018. These 677 credit unions held $48.5 billion in total assets, or 3% of total system assets. Credit unions in this category reported a 2.4% decrease in total loans. Membership fell 4.3%. Net worth rose 1.1%.
- The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,635 in the fourth quarter of 2019 from 1,695 in the fourth quarter of 2018. These credit unions held $41.3 billion in assets, or 3% of total system assets. Credit unions in this category reported a 3.0% decrease in loans. Membership declined 5.8%. Net worth fell 1.0%.
- The number of federally insured credit unions with less than $10 million in assets declined to 1,329 in the fourth quarter of 2019 from 1,421 in the fourth quarter of 2018. These credit unions held $5.5 billion in assets, or 0.4% of total system assets. Credit unions in this category reported a 7.0% decline in loans. Membership fell 9.1%. Net worth declined 4.6%.
The full report can be found here.