ALEXANDRIA, Va.–Overall credit union performance remained robust through the first three quarters of this year, but new data show it’s the CUs of more than $1 billion in assets that continue to fuel the engine, with credit unions with less than $100 million in assets generally showing declines in loans, membership, and net worth over the year.
But the new NCUA data also show the number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 240 in the third quarter of 2018 from 246 in the third quarter of 2017. Interestingly, NCUA reported credit unions in this category reported no loan growth over the year.
The numbers were released as part of NCUA’s NCUA’s Quarterly Credit Union Data Summary reports, with the latest report including data through Sept. 30, and is based on the performance of 5,436 federally insured credit unions representing 115.4 million members.
Credit Union Performance Overview
Here is how credit unions performed by category during Q3, according to NCUA:
- Total assets in federally insured credit unions rose by $77 billion, or 5.6%, over the year ending in the third quarter of 2018, to $1.44 trillion.
- Total loans outstanding increased $89 billion, or 9.5%, over the year to $1.0 trillion. The average outstanding loan balance in the third quarter of 2018 was $15,268, up $557, or 3.8%, from one year earlier.
- The delinquency rate at federally insured credit unions was 67 basis points in the third quarter of 2018, down from 79 basis points from one year earlier. The net charge-off ratio was 57 basis points, little changed from 56 basis points in the third quarter of 2017.
- Insured shares and deposits rose $52 billion, or 4.8%, over the four quarters ending in the third quarter of 2018 to $1.13 trillion, NCUA said.
- The loan-to-share ratio stood at 84.9% in the third quarter of 2018, up from 81.4% in the third quarter of 2017.
- The credit union system’s net worth ratio was 11.21% in the third quarter of 2018, compared with 10.89% one year earlier.
- Net income totaled $13.6 billion at an annual rate in the third quarter of 2018, up $3.1 billion, or 30.0%, from the same period a year ago.
- The net interest margin for federally insured credit unions was $44.0 billion in the third quarter of 2018, or 3.1% of average assets. That compares with $39.5 billion, or 3.0% of average assets, in the third quarter of 2017.
- The return on average assets for federally insured credit unions was 96 basis points over the year ending in the third quarter of 2018, up from 79 basis points in the third quarter of 2017. The median return on average assets across all federally insured credit unions was 60 basis points, up 21 basis points from the third quarter of 2017.
Credit Unions by the Numbers
- The number of federally insured credit unions declined to 5,436 in the third quarter of 2018 from 5,642 in the third quarter of 2017. In the third quarter of 2018, there were 3,421 federal credit unions and 2,015 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 2,561 in the third quarter of 2018 from 2,538 one year earlier.
- Federally insured credit unions added 4.9 million members over the year, and credit union membership in these institutions reached 115.4 million in the third quarter of 2018.
Balance Sheet Details
- Cash and equivalents (assets with maturity of three months or less) declined $8.4 billion, or 8.4%, to $102.1 billion.
- Total investments (instruments with maturities in excess of three months) fell $11.3 billion, or 4.2%, to $256.1 billion.
- Investments with maturities of less than one year declined $4.1 billion, or 5.3%, to $72.2 billion.
- Investments with maturities of one to three years declined $1.8 billion, or 2.1%, to $86.7 billion.
- Investments with maturities of three to five years declined $7.2 billion, or 10.4%, to $61.6 billion.
- Investments with maturities of five to 10 years rose $2.5 billion, or 8.5%, to $32.0 billion.
- Investments with maturities greater than 10 years fell $0.7 billion, or 16.7%, to $3.7 billion.
The Loan Portfolio
- Total loans outstanding increased $89.2 billion, or 9.5%, over the year to $1.0 trillion. Credit union loan balances rose over the year in every major category, compared with the third quarter of 2017.
- Loans secured by 1- to 4-family residential properties increased $46.6 billion, or 11.8%, to $439.9 billion in the third quarter of 2018.
- Auto loans increased $35.4 billion, or 10.8%, to $361.7 billion. Used auto loans rose $19.4 billion, or 9.8%, to $217.4 billion. New auto loans rose $16.0 billion, or 12.5%, to $144.3 billion.
- Credit card balances rose $4.6 billion, or 8.4%, to $59.4 billion
- Non-federally guaranteed student loans rose $0.7 billion, or 15.4%, to $4.9 billion.
- Commercial loans, excluding unfunded commitments, increased $7.2 billion, or 11.6%, over the year to $68.9 billion in the third quarter of 2018. Commercial loans are not directly comparable to member business loans.
Delinquencies & Charge-Offs
- The delinquency rate at federally insured credit unions was 67 basis points in the third quarter of 2018, down from 79 basis points one year earlier.
- The delinquency rate on fixed real estate loans was 41 basis points in the third quarter, down from 48 basis points one year earlier. The credit card delinquency rate was 127 basis points, up from 121 basis points in the third quarter of 2017.
- For auto loans, the delinquency rate was 60 basis points in the third quarter of 2018 compared with 64 basis points one year earlier.
- The delinquency rate for commercial loans, excluding unfunded commitments, was 75 basis points in the third quarter of 2018, down from 189 basis points in the third quarter of 2017.
- The net charge-off ratio for all federally insured credit unions was 57 basis points in the third quarter of 2018, compared with 56 basis points in the third quarter of 2017.
Liabilities and Net Worth
- Credit union shares and deposits rose by $57.9 billion, or 5.0%, over the year to $1.21 trillion in the third quarter of 2018. Regular shares rose $24.3 billion, or 5.8%, to $444.1 billion. Other deposits increased $22.8 billion, or 4.0%, to $588.7 billion, led by share certificate accounts, which were up $18.4 billion, or 8.8%, and money market accounts, which rose $2.8 billion, or 1.1%.
- The credit union system’s net worth increased by $12.9 billion, or 8.7%, over the year to $161.5 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 11.21% in the third quarter of 2018, up from 10.89 percent.
- Net income for federally insured credit unions in the third quarter of 2018 totaled $13.6 billion at an annual rate, up $3.1 billion, or 30.0%, from the third quarter of 2017. Interest income rose $6.3 billion, or 13.5%, over the year to $53.0 billion, and non-interest income increased $2.1 billion, or 11.7%, to $19.9 billion.
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Interest expense totaled $9.1 billion annualized in the third quarter of 2018, up $1.8 billion, or
25.5%, from one year earlier. Non-interest expenses grew $3.2 billion, or 7.9%, over the year to $43.9 billion in the third quarter. Rising labor expenses, which were up $1.6 billion, or 7.8%, accounted for half of the increase in non-interest expenses. - The aggregate net interest margin widened by $4.5 billion over the year, or 11.3%, to $44.0 billion at an annual rate in the third quarter of 2018.
- The credit union system’s provision for loan and lease losses rose $0.2 billion over the year, or 3.0%, to $6.4 billion at an annual rate in the third quarter of 2018.
CUs By Asset Size
Once again, NCUA 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 third quarter of 2018. Credit unions with less than $100 million in assets generally reported declines in loans, membership, and net worth over the year.”
More specifically:
- The number of federally insured credit unions with assets of at least $1 billion increased to 303 in the third quarter of 2018 from 284 in the third quarter of 2017. These 303 credit unions held $939.8 billion in assets, or 65% of total system assets. Credit unions in this category reported loan growth of 13.2%. Membership rose 9.6%. Net worth increased 12.8%.
- The number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 240 in the third quarter of 2018 from 246 in the third quarter of 2017. These 240 credit unions held $169.5 billion in total assets, or 12% of total system assets. Credit unions in this category reported no loan growth over the year. Membership fell 2.5%, and net worth was unchanged.
- The number of federally insured credit unions with at least $100 million but less than $500 million in assets rose to 1,031 in the third quarter of 2018 from 1,026 in the third quarter of 2017. These 1,031 credit unions held $231.9 billion in total assets, or 16% of total system assets. Credit unions in this category reported loan growth of 5.9%. Membership edged up 0.4%. Net worth increased 4.5%.
- The number of federally insured credit unions with at least $50 million but less than $100 million in assets fell to 690 in the third quarter of 2018 from 724 in the third quarter of 2017. These 690 credit unions held $49.6 billion in total assets, or 3% of total system assets. Credit unions in this category reported a 1.4% decline in total loans. Membership fell 5.6%. Net worth declined 0.8%.
- The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,725 in the third quarter of 2018 from 1,800 in the third quarter of 2017. These credit unions held $43.5 billion in assets, or 3% of total system assets. Credit unions in this category reported a 0.8% increase in loans. Membership declined 5.1%. Net worth rose 0.4%.
- The number of federally insured credit unions with less than $10 million in assets declined to 1,447 in the third quarter of 2018 from 1,562 in the third quarter of 2017. These credit unions held $6.0 billion in assets, or less than 0.5% of total system assets. Credit unions in this category reported a 3.2% decline in loans. Membership fell 9.0%. Net worth declined 3.3%.