ALEXANDRIA, Va.—“Anemic” credit union loan performance, along with rising delinquencies and declining net income, have NCUA Chairman Todd Harper concerned about the balance sheets of CU members and growing risk within loan portfolios.
According to credit union system performance data for the third quarter of 2024, total loans outstanding in federally insured credit unions increased $41 billion, or 2.6%, over the year ending in the third quarter of 2024, to $1.63 trillion. Total assets rose by $82 billion, or 3.7%, to $2.31 trillion during the same period. However, the delinquency rate was 91 basis points, up 19 basis points from one year earlier. Net income in the first three quarters totaled $15.8 billion at an annual rate, down $0.8 billion, or 4.7%, from the first three quarters of 2023.
Todd Harper
“The credit union system remains healthy overall but with several mixed signals,” Harper said. “For the year ending in the third quarter of 2024, assets, loans outstanding, insured shares and deposits, and net worth all grew. Yet, net income declined year-over-year, and we experienced anemic loan performance along with rising default rates. Credit card and auto loan delinquencies remain especially elevated. The NCUA, therefore, continues to urge credit unions to carefully manage their credit risks in this time of growing financial stress among members.”
The data point to a growing weakness in auto lending (auto loans fell 3% to $15.2 billion), and also share the continuing plight of smaller credit unions, as CUs with assets of at least $1 billion reported the strongest growth in loans, membership, and net worth.
Key Performance Indicators
- Total assets in federally insured credit unions rose by $82 billion, or 3.7%, over the year ending in the third quarter of 2024, to $2.31 trillion.
- Total loans outstanding increased $41 billion, or 2.6%, over the year, to $1.63 trillion. The average outstanding loan balance in the third quarter of 2024 was $18,299, up $471, or 2.6%, from one year earlier.
- The delinquency rate at federally insured credit unions was 91 basis points in the third quarter of 2024, up 19 basis points from one year earlier. The net charge-off ratio was 78 basis points, up 22 basis points compared with the third quarter of 2023.
- Insured shares and deposits rose $44 billion, or 2.6%, over the year ending in the third quarter of 2024, to $1.76 trillion.
- The loan to share ratio stood at 84.3% in the third quarter of 2024, down from 84.8% in the third quarter of 2023.
- The credit union system’s net worth ratio was 10.94% in the third quarter of 2024, compared with 10.72% one year earlier. (Note that beginning in 2023Q1, this ratio excludes the Current Expected Credit Loss (CECL) transition provision.)
- Net income totaled $15.8 billion at an annual rate in the year to date through the third quarter, down $0.8 billion, or 4.7%, compared with the same period in 2023.
- The net interest margin for federally insured credit unions was $70.5 billion at an annual rate in the year to date through the third quarter of 2024, or 3.09% of average assets. That compares with $66.5 billion, or 3.02% of average assets, in the year to date through the third quarter of 2023.
- The return on average assets for federally insured credit unions was 69 basis points at an annual rate in the first three quarters of 2024, down from 76 basis points in the first three quarters of 2023. The median annualized return on average assets across all federally insured credit unions was 63 basis points, down 3 basis points from a year earlier.
- The number of federally insured credit unions declined to 4,499 in the third quarter of 2024, from 4,644 in the third quarter of 2023. In the third quarter of 2024, there were 2,820 federal credit unions and 1,679 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 declined to 2,446 in the third quarter of 2024 from 2,574 one year earlier. Their share edged down from 55% of all federally insured credit unions in the third quarter of 2023 to 54% in the third quarter of 2024.
- The number of complex federally insured credit unions (those with total assets greater than $500 million) rose to 719 from 710 one year earlier.
- 426 opted into the Complex Credit Union Leverage Ratio (CCULR) framework with an average CULR of 11.99%.
- 293 reported under the Risk-Based Capital (RBC) framework with an average RBC ratio of 15.32%.
- Federally insured credit unions added 3.2 million members over the year, and credit union membership in these institutions reached 142.0 million in the third quarter of 2024.
Balance Sheet Details
Assets
- Total assets in federally insured credit unions rose by $82.2 billion, or 3.7%, over the year to $2.31 trillion in the third quarter of 2024.
- Cash increased by $40.0 billion, or 27.5%, to $185.7 billion.
- Total investments fell $10.2 billion, or 2.5%, over the year to $392.2 billion in the third quarter of 2024.
- Investments with maturities less than or equal to one year rose $6.2 billion, or 6.3%, to $104.7 billion.
- Investments with maturities of one to three years were essentially unchanged at $109.3 billion.
- Investments with maturities of three to five years edged up $0.8 billion, or 1.1%, to $76.8 billion.
- Investments with maturities of five to 10 years fell by $12.3 billion, or 12.8%, to $83.1 billion.
- Investments with maturities greater than 10 years declined $5.0 billion, or 21.6%, to $18.2 billion.
- Total loans outstanding increased $40.6 billion, or 2.6%, over the year to $1.63 trillion. Growth across major categories was mixed.
- Loans secured by 1- to 4-family residential properties increased $36.4 billion, or 5.2%, to $736.3 billion in the third quarter of 2024.
- Auto loans fell $15.2 billion, or 3.0%, to $485.7 billion. Used auto loans contracted by $4.7 billion, or 1.5%, to $319.5 billion, while new auto loans declined by $10.5 billion, or 6.0%, to $166.2 billion.
- Credit card balances grew by $4.3 billion, or 5.5%, to $83.0 billion.
- Non-federally guaranteed student loans edged down $0.3 billion, or 4.1%, to $7.1 billion.
- Commercial loans excluding unfunded commitments increased $15.5 billion, or 10.1%, over the year to $168.4 billion in the third quarter of 2024.
- The delinquency rate at federally insured credit unions was 91 basis points in the third quarter of 2024, up 19 basis points compared with the third quarter of 2023.
- The delinquency rate on non-commercial real estate loans was 69 basis points in the third quarter of 2024, 20 basis points higher than in the third quarter of 2023.
- The credit card delinquency rate rose to 216 basis points, up from 190 basis points one year earlier.
- The auto loan delinquency rate increased 11 basis points over the year to 90 basis points in the third quarter of 2024.
- The delinquency rate for commercial loans excluding unfunded commitments was 90 basis points in the third quarter of 2024, up 45 basis points from a year earlier.
- The net charge-off ratio for all federally insured credit unions was 78 basis points in the third quarter of 2024, up 22 basis points compared with the third quarter of 2023.
Liabilities and Net Worth
- Total shares and deposits grew by $58.9 billion, or 3.1%, over the year to $1.93 trillion in the third quarter of 2024. Regular shares declined by $35.0 billion, or 6.0%, to $553.0 billion. Other deposits increased by $98.0 billion, or 10.8%, to $1.01 trillion, led by share certificate accounts, which grew $106.8 billion, or 24.0%, over the year to $551.0 billion.
- The credit union system’s net worth increased by $14.0 billion, or 5.8%, over the year to $252.9 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.94% in the third quarter of 2024, up from 10.72% one year earlier. Note that beginning in 2023Q1, this ratio excludes the CECL transition provision.
- The net worth ratio for prompt corrective action was 11.17% in the third quarter of 2024. This ratio considers the CECL Transition Provision, as applicable. The calculation can be found on Schedule G of the 5300 Call Report; see Account 998.
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 third quarter of 2024.
- The number of federally insured credit unions with assets of at least $10 billion declined to 21 in the third quarter of 2024 from 22 in the third quarter of 2023. These 21 credit unions held $578.6 billion in assets, or 25% of total system assets. Credit unions in this category reported loan growth of 1.6% over the year. Membership rose 3.5%. Net worth increased 5.1%.
- The number of federally insured credit unions with assets of at least $1 billion but less than $10 billion increased to 423 in the third quarter of 2024 from 402 in the third quarter of 2023. These 423 credit unions held $1.2 trillion in assets, or 52% of total system assets. Credit unions in this category reported loan growth of 5.8% over the year. Membership rose 5.9%. Net worth increased 8.9%.
- The number of federally insured credit unions with assets of at least $500 million but less than $1 billion declined to 275 in the third quarter of 2024 from 286 in the third quarter of 2023. These 275 credit unions held $198.7 billion in total assets, or 9% of total system assets. Credit unions in this category reported a 6.1% decline in total loans outstanding over the year. Membership declined 6.8%, and net worth fell by 2.8%.
- The number of federally insured credit unions with at least $100 million but less than $500 million in assets fell to 1,048 in the third quarter of 2024 from 1,058 in the third quarter of 2023. These 1,048 credit unions held $241.4 billion in total assets, or 10% of total system assets. Credit unions in this category reported a 1.6% decrease in total loans outstanding over the year. Membership declined 2.6%, while net worth rose 3.1%.
- The number of federally insured credit unions with at least $50 million but less than $100 million in assets declined to 619 in the third quarter of 2024 from 643 one year earlier. These 619 credit unions held $44.7 billion in total assets, or 2% of total system assets. Credit unions in this category reported a 4.5% decline in total loans over the year. Membership declined 6.5%. Net worth rose 0.9%.
- The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,228 in the third quarter of 2024 from 1,295 in the third quarter of 2023. These credit unions held $32.1 billion in assets, or 1% of total system assets. Credit unions in this category reported a 5.2% decrease in loans over the year. Membership declined 5.8%, while net worth rose 0.9%.
- The number of federally insured credit unions with less than $10 million in assets declined to 885 in the third quarter of 2024 from 938 in the third quarter of 2023. These credit unions held $3.7 billion in assets, or 0.2% of total system assets. Credit unions in this category reported a 7.2% decrease in loans over the year. Membership declined 6.4%. Net worth edged down 1.3%.