ALEXANDRIA, Va.–The total assets of credit unions hit $1.75 trillion at the end of the second quarter, with loans up nearly 7% and delinquencies actually down from one year earlier, according to new data from NCUA.
The numbers were released as part of the agency’s Quarterly Credit Union Data Summary which is based on Q2 2020 Call Report data from 5,164 federally insured credit unions representing 122.3 million members.
According to NCUA, the June 30 data show:
■ Total assets in federally insured credit unions rose by $229 billion, or 15.1%, over the year ending in the second quarter of 2020, to $1.75 trillion.
■ Total loans outstanding increased $70 billion, or 6.6%, over the year to $1.1 trillion. The average outstanding loan balance in the second quarter of 2020 was $16,263, up $807, or 5.2%, from one year earlier.
■ The delinquency rate at federally insured credit unions was 58 basis points in the second quarter of 2020, down 5 basis points from one year earlier. The net charge-off ratio was 53 basis points, down from 56 basis points in the second quarter of 2019.
■ Insured shares and deposits rose $188 billion, or 15.8%, over the year ending in the second quarter of 2020, to $1.4 trillion.
■ The loan-to-share ratio stood at 76.3% in the second quarter of 2020, down from 83.3% in the second quarter of 2019.
■ The credit union system’s net worth ratio was 10.46% in the second quarter of 2020, compared with 11.27% one year earlier.
■ Net income totaled $9.4 billion at an annual rate in the second quarter of 2020, down $5.0 billion, or 34.6%, 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 $47.8 billion in the second quarter of 2020, or 2.88% of average assets. That compares with $47.3 billion, or 3.18% of average assets, in the second quarter of 2019.
■ The return on average assets for federally insured credit unions was 57 basis points in the second quarter of 2020, down from 97 basis points in the second quarter of 2019. The median return on average assets across all federally insured credit unions was 39 basis points, down 24 basis points from the second quarter of 2019.
■ The number of federally insured credit unions declined to 5,164 in the second quarter of 2020, from 5,308 in the second quarter of 2019. In the second quarter of 2020, there were 3,232 federal credit unions and 1,932 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 2,652 in the second quarter of 2020 from 2,618 one year earlier.
■ Federally insured credit unions added 4.0 million members over the year, and credit union membership in these institutions reached 122.3 million in the second quarter of 2020.
Assets
■ Cash and equivalents (assets with maturity of three months or less) increased $94.0 billion, or 78.3%, to $214.2 billion.
■ Total investments (instruments with maturities in excess of three months) rose $51.6 billion, or 19.8%, to $312.9 billion.
■ Investments with maturities less than or equal to one year rose $15.9 billion, or 20.3%, to $94.2 billion.
• Investments with maturities of one to three years rose $15.9 billion, or 17.4%, to $107.5 billion.
• Investments with maturities of three to five years increased $5.5 billion, or 9.6%, to $62.8 billion.
• Investments with maturities of five to 10 years rose $7.2 billion, or 23.9%, to $37.1 billion.
• Investments with maturities greater than 10 years increased $7.2 billion, or 171.7%, to $11.4 billion.
• Total loans outstanding increased $70 billion, or 6.6%, over the year, to $1.14 trillion. Credit union loan balances rose in most major categories, compared with the second quarter of 2019.
• Loans secured by 1- to 4-family residential properties increased $42.8 billion, or 9.4%, to $499.6 billion in the second quarter of 2020.
• Auto loans increased $4.0 billion, or 1.1%, to $374.5 billion. Used auto loans rose $8.7 billion, or 3.9%, to $232.7 billion, while new auto loans fell $4.8 billion, or 3.3%, to $141.7 billion.
• Credit card balances declined $1.5 billion, or 2.4%, to $60.9 billion.
• Non-federally guaranteed student loans rose $0.4 billion, or 7.5%, to $5.7 billion.
• Commercial loans, excluding unfunded commitments, increased $13.1 billion, or 17.4%, over the year to $88.6 billion in the second quarter of 2020. Commercial loans are not directly comparable to member business loans.
■ The delinquency rate at federally insured credit unions was 58 basis points in the second quarter of 2020, down 5 basis points compared with the second quarter of 2019. Loan performance was mixed across major categories, NCUA said. The delinquency rate on fixed-rate real estate loans was 41 basis points in the second quarter, unchanged from the second quarter of 2019. The credit card delinquency rate fell to 101 basis points from 122 basis points one year earlier. For auto loans, the delinquency rate declined 8 basis point to 47 basis points in the second quarter of 2020. The delinquency rate for commercial loans, excluding unfunded commitments, was 86 basis points in the second quarter of 2020, compared with 68 basis points in the second quarter of 2019.
■ The net charge-off ratio for all federally insured credit unions was 53 basis points in the second quarter of 2020, compared with 56 basis points in the second quarter of 2019.
Liabilities & Net Worth
■ Credit union shares and deposits rose by $210.9 billion, or 16.5%, over the year to $1.49 trillion in the second quarter of 2020. Regular shares increased $66.9 billion, or 14.6%, to $526.6 billion. Other deposits increased $71.3 billion, or 11.3%, to $703.6 billion, led by money market accounts, which were up $40.3 billion, or 15.3%.
■ The credit union system’s net worth increased by $11.6 billion, or 6.8%, over the year to $182.9 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.46% in the second quarter of 2020, down from 11.27% one year earlier.
Income Statement Details
■ Net income for federally insured credit unions in the second quarter of 2020 totaled $9.4 billion at an annual rate, down $5.0 billion, or 34.6%, from the second quarter of 2019.
■ Interest income rose $0.9 billion, or 1.5%, over the year to $60.9 billion, and non-interest income increased $1.1 billion, or 5.2%, to $21.6 billion.
■ Interest expense totaled $13.1 billion annualized in the second quarter of 2020, up $0.4 billion, or 3.0%, from one year earlier. Non-interest expenses grew $3.3 billion, or 7.0%, over the year to $50.3 billion in the second quarter. Rising labor expenses, which were up $2.1 billion, or 8.7%, accounted for nearly two-thirds of the increase in non-interest expenses.
■ The aggregate net interest margin widened by $0.5 billion, or 1.1%, over the year to $47.8 billion at an annual rate in the second quarter of 2020.
■ The credit union system’s provision for loan and lease losses or credit loss expense rose $3.3 billion, or 51.5%, over the year, to $9.7 billion at an annual rate in the second quarter of 2020.
Performance By Asset Category
Consistent with long-running trends, NCUA noted 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 2020.
■ The number of federally insured credit unions with assets of at least $1 billion increased to 357 in the second quarter of 2020 from 317 in the second quarter of 2019. These 357 credit unions held $1.2 trillion in assets, or 70% of total system assets. Credit unions in this category reported loan growth of 12.0%. Membership rose 10.2%. Net worth increased 12.0%.
■ The number of federally insured credit unions with assets of at least $500 million but less than $1 billion rose to 270 in the second quarter of 2020 from 259 in the second quarter of 2019. These 270 credit unions held $190.3 billion in total assets, or 11% of total system assets. Credit unions in this category reported a 3.2% decline in total loans outstanding over the year. Membership fell 5.9%, and net worth decreased 3.6%.
■ The number of federally insured credit unions with at least $100 million but less than $500 million in assets increased to 1,061 in the second quarter of 2020 from 1,012 in the second quarter of 2019. These 1,061 credit unions held $235.6 billion in total assets, or 13% of total system assets. Credit unions in this category reported a 4.4% decline in total loans outstanding. Membership fell 4.9%. Net worth fell 1.5%.
■ The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 665 in the second quarter of 2020 from 680 in the second quarter of 2019. These 665 credit unions held $47.9 billion in total assets, or 3% of total system assets. Credit unions in this category reported an 11.8% decrease in total loans. Membership also fell 11.8%. Net worth declined 6.3%.
■ The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,580 in the second quarter of 2020 from 1,677 in the second quarter of 2019. These credit unions held $40.7 billion in assets, or 2% of total system assets. Credit unions in this category reported a 13.3% decrease in loans. Membership declined 12.2%. Net worth fell 8.7%.
■ The number of federally insured credit unions with less than $10 million in assets declined to 1,231 in the second quarter of 2020 from 1,363 in the second quarter of 2019. These credit unions held $5.1 billion in assets, or 0.3% of total system assets. Credit unions in this category reported a 17.9% decline in loans. Membership fell 14.2%. Net worth declined 10.3%.