ALEXANDRIA, Va.– Total assets in federally insured credit unions rose by $96 billion (4.4%), over the year ending in the first quarter of 2024 to $2.31 trillion, total loans outstanding increased $71 billion (4.6%) to $1.60 trillion, and insured shares and deposits rose $40 billion (2.3%) to $1.77 trillion, from one year earlier, but the real number getting attention is the delinquency rate, which jumped 25 basis points compared with the first quarter of 2023.
The numbers were released as part of NCUA’s Quarterly Data Summary Report, which for the first time also includes data on OD and NSF income from credit unions of more than $1 billion in assets (see separate story).
As of March 31, 2024, there were 4,572 federally insured credit unions with 140.4 million members.
‘Solid Footing,’ But…
NCUA’s deputy chief economist, Rachel Cononi, said credit unions are on “solid financial footing,” with industry’s net worth ratio having increased 14 basis points, which she said will help to offset some challenges.
Those challenges include increased funding costs—there’s been a big increase in certificate balances as CUs have tried to hold on to deposits--even as net interest margins have remained essentially unchanged over the last four quarters at about 3%, she said.
Credit Card Concerns
The biggest issue overall long delinquency rate in the first quarter was 78 basis points higher at the end of the first quarter over year-end, and 25 basis points higher than during the same quarter in 2023. A particular concern is the credit card delinquency rate, which was 2.02% in the first quarter, said Cononi, a ratio roughly in line with what was seen during the Great Recession, even though the current employment market is strong.
“A significant segment credit union membership is feeling financial stress,” Cononi stated.
Select Performance Indicators
According to NCUA, the Q1 data show:
- Total assets in federally insured credit unions rose by $96 billion, or 4.4%, over the year ending in the first quarter of 2024, to $2.31 trillion.
- Total loans outstanding increased $71 billion, or 4.6%, over the year, to $1.60 trillion. The average outstanding loan balance in the first quarter of 2024 was $18,062, up $748, or 4.3%, from one year earlier.
- The delinquency rate at federally insured credit unions was 78 basis points in the first quarter of 2024, up 25 basis points from one year earlier. The net charge-off ratio was 80 basis points, up 29 basis points compared with the first quarter of 2023.
- Insured shares and deposits rose $40 billion, or 2.3%, over the year ending in the first quarter of 2024, to $1.77 trillion.
- The loan-to-share ratio stood at 82.8% in the first quarter of 2024, up from 81.0% in the first quarter of 2023.
- The credit union system’s net worth ratio was 10.62% in the first quarter of 2024, compared with 10.48% one year earlier. NCUA reminded that beginning in 2023Q1, this ratio excludes the Current Expected Credit Loss (CECL) transition provision.
- Net income totaled $15.0 billion at an annual rate in 2024, down $2.8 billion, or 15.6%, compared with the first quarter of 2023.
- The net interest margin for federally insured credit unions was $68.4 billion at an annual rate in the first quarter of 2024, or 3.00% of average assets. That compares with $65.9 billion, or 3.01% of average assets, in the first quarter of 2023.
- The return on average assets for federally insured credit unions was 66 basis points at an annual rate in the first quarter of 2024, down from 81 basis points in the first quarter of 2023. The median annualized return on average assets across all federally insured credit unions was 55 basis points, down seven basis points from a year earlier.
- The number of federally insured credit unions declined to 4,572 in the first quarter of 2024, from 4,712 in the first quarter of 2023. In the first quarter of 2024, there were 2,862 federal credit unions and 1,710 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 declined to 2,468 in the first quarter of 2024 from 2,596 one year earlier. Their share edged down from 55% of all federally insured credit unions in the first quarter of 2023 to 54% in the first quarter of 2024.
- The number of complex federally insured credit unions (those with total assets greater than $500 million) rose to 717 from 712 one year earlier.
- 428 CUs opted into the Complex Credit Union Leverage Ratio (CCULR) framework with an average CCULR of 11.69%.
- 289 CUs reported under the Risk-Based Capital (RBC) framework with an average RBC ratio of 15.15%.
- Federally insured credit unions added 3.8 million members over the year, and credit union membership in these institutions reached 140.4 million in the first quarter of 2024.
Balance Sheet Details
Assets
- Total assets in federally insured credit unions rose by $96.3 billion, or 4.4%, over the year to $2.31 trillion in the first quarter of 2024.
- Cash increased by $53.0 billion, or 32.7%, to $215.1 billion.
- Total investments fell $38.3 billion, or 8.9%, over the year to $390.8 billion in the first quarter of 2024.
- Investments with maturities less than or equal to one year rose $10.8 billion, or 11.9%, to $101.7 billion.
- Investments with maturities of one to three years declined $10.8 billion, or 9.4%, to $103.3 billion.
- Investments with maturities of three to five years fell $14.2 billion, or 16.4%, to $72.4 billion.
- Investments with maturities of five to 10 years declined $22.4 billion, or 19.8%, to $91.1 billion.
- Investments with maturities greater than 10 years declined $1.7 billion, or 7.0%, to $22.4 billion.
- Total loans outstanding increased $70.7 billion, or 4.6%, over the year to $1.60 trillion. Growth across major categories was mixed.
- Loans secured by 1- to 4-family residential properties increased $43.2 billion, or 6.4%, to $712.8 billion in the first quarter of 2024.
- Auto loans edged down $1.1 billion, or 0.2%, to $491.9 billion. Used auto loans rose $3.4 billion, or 1.1%, to $320.8 billion, more than offsetting a $4.5 billion, or 2.6%, decline in new auto loans to $171.1 billion.
- Credit card balances grew by $6.6 billion, or 9.0%, to $80.8 billion.
- Non-federally guaranteed student loans edged down $0.2 billion, or 3.3%, to $7.3 billion.
- Commercial loans excluding unfunded commitments increased $16.4 billion, or 11.4%, over the year to $160.0 billion in the first quarter of 2024.
Delinquencies
- The delinquency rate at federally insured credit unions was 78 basis points in the first quarter of 2024, up 25 basis points compared with the first quarter of 2023.
- The delinquency rate on non-commercial real estate loans was 49 basis points in the first quarter of 2024, 19 basis points higher than in the first quarter of 2023.
- The credit card delinquency rate rose to 202 basis points from 148 basis points one year earlier.
- The auto loan delinquency rate increased 21 basis points over the year to 79 basis points in the first quarter of 2024.
- The delinquency rate for commercial loans excluding unfunded commitments was 84 basis points in the first quarter of 2024, up 49 basis points from a year earlier.
- The net charge-off ratio for all federally insured credit unions was 80 basis points in the first quarter of 2024, up 29 basis points compared with the first quarter of 2023.
Liabilities and Net Worth
- Total shares and deposits rose by $45.0 billion, or 2.4%, over the year to $1.93 trillion in the first quarter of 2024. Regular shares declined by $68.0 billion, or 10.6%, to $574.4 billion.
- Other deposits increased by $124.8 billion, or 14.6%, to $978.7 billion, led by share certificate accounts, which grew $155.7 billion, or 43.0%, over the year to $517.8 billion.
- The credit union system’s net worth increased by $13.3 billion, or 5.7%, over the year to $245.0 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.62% in the first quarter of 2024, up from 10.48% one year earlier. Note that beginning in 2023Q1, this ratio excludes the CECL transition provision.
- The net worth ratio for prompt corrective action was 10.88% in the first quarter of 2024. This ratio considers the CECL Transition Provision, as applicable, NCUA said.
Income Statement Details
- Net income for federally insured credit unions in the first quarter of 2024 totaled $15.0 billion at an annual rate, down $2.8 billion, or 15.6%, from the first quarter of 2023. Interest income rose $21.4 billion, or 24.0%, over the year to $110.4 billion annualized.
- Non-interest income rose $2.6 billion, or 10.6%, to $26.6 billion annualized, largely reflecting an increase in other non-interest income.
- Interest expense totaled $42.0 billion at an annual rate in the first quarter of 2024, up $18.9 billion, or 81.9%, from one year earlier.
- Non-interest expense grew $3.8 billion, or 6.0%, over the year to $67.3 billion annualized in the first quarter of 2024. Rising employee compensation and benefits, which were up $2.2 billion, or 6.7%, over the year, accounted for more than half of the increase in non- interest expenses.
- The aggregate net interest margin widened by $2.5 billion, or 3.7%, over the year to $68.4 billion annualized in the first quarter or 2024.
- The credit union system’s provision for loan and lease losses or credit loss expense increased $4.0 billion, or 45.8%, over the year to $12.7 billion at an annual rate in the first quarter of 2024.
Performance by Asset Category
- 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 first quarter of 2024, NCUA said.
- The number of federally insured credit unions with assets of at least $10 billion declined to 21 in the first quarter of 2024 from 22 in the first quarter of 2023. These 21 credit unions held $576.8 billion in assets, or 25% of total system assets. Credit unions in this category reported loan growth of 5.3% over the year.
- Membership rose 5.0%. Net worth increased 3.3%.
- The number of federally insured credit unions with assets of at least $1 billion but less than $10 billion increased to 422 in the first quarter of 2024 from 404 in the first quarter of 2023. These 422 credit unions held $1.2 trillion in assets, or 52% of total system assets. Credit unions in this category reported loan growth of 6.8% over the year. Membership rose 5.7%. Net worth increased 9.3%.
- The number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 274 in the first quarter of 2024 from 286 in the first quarter of 2023. These 274 credit unions held $198.7 billion in total assets, or 9% of total system assets. Credit unions in this category reported a 4.8% decline in total loans outstanding over the year. Membership declined 7.4%, and net worth fell by 3.4%.
- The number of federally insured credit unions with at least $100 million but less than $500 million in assets rose to 1,069 in the first quarter of 2024 from 1,066 in the first quarter of 2023. These 1,069 credit unions held $245.6 billion in total assets, or 11% of total system assets. Credit unions in this category reported a 2.2% increase in total loans outstanding over the year. Membership declined 1.0%, while net worth rose 4.4%.
- The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 622 in the first quarter of 2024 from 655 one year earlier. These 622 credit unions held $45.0 billion in total assets, or 2% of total system assets. Credit unions in this category reported a 3.7% decline in total loans over the year. Membership declined 5.4%. Net worth rose1.2%.
- The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,253 in the first quarter of 2024 from 1,329 in the first quarter of 2023. These credit unions held $33.1 billion in assets, or 1% of total system assets. Credit unions in this category reported a 0.4% increase in loans over the year. Membership declined 5.3%, while net worth rose 1.7%.
- The number of federally insured credit unions with less than $10 million in assets declined to 911 in the first quarter of 2024 from 950 in the first quarter of 2023. These credit unions held $3.8 billion in assets, or 0.2% of total system assets. Credit unions in this category reported a 3.8% increase in loans over the year. Membership declined 2.7%. Net worth grew 4.2%.