Here's How Federally Insured CU Performed During Q2

ALEXANDRIA, Va.–Total assets at federally insured credit unions rose by $91-billion, or 6.3%, during the second quarter to hit $1.52-trillion, according to new data released by NCUA. There were 5,308 federally insured CUs at mid-year 2019 serving 118.3-million members according to the agency.

In good news, net income, net worth and the loan-to-share ratio all ticked up in the most recent numbers. As continues to be the case, most of the growth came among the largest-asset-size CUs.

Among the other data points released as part of NCUA’s System Performance Report for the second quarter: 

• Total loans outstanding increased $64 billion, or 6.4%, over the year to $1.1 trillion. The average outstanding loan balance in the second quarter of 2019 was $15,458, up $228, or 1.5%, from one year earlier. 

• The delinquency rate at federally insured credit unions was 63 basis points in the second quarter of 2019, down from 67 basis points one year earlier. The net charge-off ratio was 56 basis points, down slightly from 60 basis points in the second quarter of 2018. 
• Insured shares and deposits rose $62 billion, or 5.5%, over the four quarters ending in the second quarter of 2019, to $1.19 trillion.
• The loan-to-share ratio stood at 83.3% in the second quarter of 2019, up from 83.0% in the second quarter of 2018. 
• The credit union system’s net worth ratio was 11.27% in the second quarter of 2019, compared with 11.01% one year earlier. 
• Net income totaled $14.4 billion at an annual rate in the second quarter of 2019, up $1.7 billion, or 13.5%, from the same period a year ago. 
• The net interest margin for federally insured credit unions was $47.3 billion in the second quarter of 2019, or 3.2% of average assets. That compares with $43.2 billion, or 3.1% of average assets, in the second quarter of 2018. 
• The return on average assets for federally insured credit unions was 97 basis points over the year ending in the second quarter of 2019, up from 90 basis points in the second quarter of 2018. The median return on average assets across all federally insured credit unions was 63 basis points, up 12 basis points from the second quarter of 2018. 
• The number of federally insured credit unions declined to 5,308 in the second quarter of 2019 from 5,480 in the second quarter of 2018. In the second quarter of 2019, there were 3,335 federal credit unions and 1,973 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 2,618 in the second quarter of 2019 from 2,544 one year earlier. 
• Federally insured credit unions added 4.3 million members over the year, and credit union membership in these institutions reached 118.3 million in the second quarter of 2019. 

The Balance Sheet

Looking at a more granular level, the NCUA data also show:

• Cash and equivalents (assets with maturity of three months or less) increased $18.2 billion, or 17.8%, to $120.2 billion. 
• Total investments (instruments with maturities in excess of three months) fell $1.4 billion, or 0.5%, to $261.2 billion. 

• • Loans secured by 1- to 4-family residential properties increased $25.8 billion, or 6.0%, to $456.7 billion in the second quarter of 2019. 
  • Auto loans increased $18.5 billion, or 5.2%, to $370.5 billion. Used auto loans rose $11.3 billion, or 5.3%, to $224.0 billion. New auto loans rose $7.2 billion, or 5.1%, to $146.5 billion. 
  • Credit card balances rose $4.5 billion, or 7.7%, to $62.4 billion 
  • Non-federally guaranteed student loans rose $0.7 billion, or 14.6%, to $5.3 billion. 
  • Commercial loans, excluding unfunded commitments, increased $7.8 billion, or 11.6%, over  the year to $75.5 billion in the second quarter of 2019. Commercial loans are not directly comparable to member business loans. 
  • The delinquency rate on fixed real estate loans was 41 basis points in the second quarter, little changed from 40 basis points one year earlier.
  • Thecredit card delinquency rate was 122 basis points, up from 115 basis points in the second quarter of 2018. 
  • Forauto loans, the delinquency rate was unchanged at 55 basis points in the second quarter of 2019. 
  • The delinquency rate for commercial loans, excluding unfunded commitments, was 68 basis points in the second quarter of 2019, down from 130 basis points in the second quarter of 2018. 
  • Thenet charge-off ratio for all federally insured credit unions was 56 basis points in the second quarter of 2019, compared with 60 basis points in the second quarter of 2018. 

Liabilities and Net Worth 

NCUA further reported:

• . Regular shares rose $11.0 billion, or 2.5%, to $458.5 billion. Other deposits increased $50.6 billion, or 8.7%, to $632.3 billion, led by share certificate accounts, which were up $45.1 billion, or 20.5%. 
• The credit union system’s net worth increased by $14.0 billion, or 8.9%, over the year to $171.4 billion. The aggregate net worth ratio — net worth as a%age of assets — stood at 11.27% in the second quarter of 2019, up from 11.01% one year earlier.

Net Income

• Interest income rose $8.2 billion, or 15.7%, over the year to $60.0 billion, and non-interest income increased $0.8 billion, or 4.2%, to $20.6 billion. 
• Interest expense totaled $12.7 billion annualized in the second quarter of 2019, up $4.0 billion, or
  46.1%, from one year earlier. Non-interest expenses grew $3.6 billion, or 8.2%, over the year to $47.1 billion in the second quarter. Rising labor expenses, which were up $2.0 billion, or 8.9%, accounted for more than half of the increase in non-interest expenses. 
• The aggregate net interest margin widened by $4.1 billion over the year, or 9.6%, to $47.3 billion at an annual rate in the second quarter of 2019. 
• The credit union system’s provision for loan and lease losses or credit loss expense declined $0.3 billion over the year, or 4.8%, to $6.4 billion at an annual rate in the second quarter of 2019. 

Performance by Asset Category

The agency noted again that 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 second quarter of 2019. Credit unions with less than $500 million in assets reported declines in those categories over the year. 

• The number of federally insured credit unions with assets of at least $1 billion increased to 317 in the second quarter of 2019 from 302 in the second quarter of 2018. These 317 credit unions held $1.0 trillion in assets, or 67% of total system assets. Credit unions in this category reported loan growth of 9.0%. Membership rose 8.0%. Net worth increased 12.5%. 
• The number of federally insured credit unions with assets of at least $500 million but less than
  $1 billion rose to 259 in the second quarter of 2019 from 240 in the second quarter of 2018. These 259 credit unions held $181.6 billion in total assets, or 12.0% of total system assets. Credit unions in this category reported a 7.4% increase in total loans outstanding over the year. Membership rose 5.6%, and net worth increased 8.6%. 
• The number of federally insured credit unions with at least $100 million but less than $500 million in assets declined to 1,012 in the second quarter of 2019 from 1,034 in the second quarter of 2018. These 1,012 credit unions held $224.1 billion in total assets, or 15.0% of total system assets. Credit unions in this category reported a 3.2% decline in total loans outstanding. Membership fell 5.8%. Net worth edged down 0.8%. 
• The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 680 in the second quarter of 2019 from 709 in the second quarter of 2018. These 680 credit unions held $49.0 billion in total assets, or 3.0% of total system assets. Credit unions in this category reported a 2.0% decrease in total loans. Membership fell 5.0%. Net worth edged down 0.6%. 
• The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,677 in the second quarter of 2019 from 1,731 in the second quarter of 2018. These credit unions held $42.3 billion in assets, or 3.0% of total system assets. Credit unions in this category reported a 1.3% increase in loans. Membership declined 3.4%. Net worth rose 1.7%. 
• The number of federally insured credit unions with less than $10 million in assets declined to 1,363 in the second quarter of 2019 from 1,464 in the second quarter of 2018. These credit unions held $5.6 billion in assets, or less than 0.4% of total system assets. Credit unions in this category reported a 2.8% decline in loans. Membership fell 7.9%. Net worth declined 4.2%. 

The full NCUA quarterly report can be found here.