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Federally-Insured CUs Post Y-o-Y Double Digit Loan Growth "Credit News 24"

The National Credit Union Administration reported an increase in asset, loans, and shares at federally-insured credit unions during the second quarter.

Assets at credit unions increased by 1 percent during the second quarter to $1.35 trillion as of June 2018.

Loans increased at a double digit year-over-year (Y-o-Y) rate at the end of the second quarter of 2018. Year-over-year loan growth was 10.9 percent.

However, the pace of loan growth accelerated during the second quarter. Total loans increased by almost $28.5 billion or 3.2 percent during the second quarter to $913 billion. All major loan categories grew in second quarter.

Indirect loans grew by almost 5 percent during the quarter to $181.1 billion. As of June 2018, indirect loans accounted for 19.83 percent of loans.

Total shares and deposits rose by 0.7 percent during the second quarter to approximately $1.146 trillion dollars.

Because loan growth outpaced share growth, the loan to share (deposit) ratio increased from 77.73 percent at the end of the first quarter of 2018 to 79.70 percent as of June 2018.

Net Income on Annual Pace to Top $10 Billion

Net income for federally-insured credit unions was almost $5.1 billion for the first six months of 2018.

The industry's return on average assets (ROA) was 0.77 percent as of June 2018 -- up 6 basis points from March 2018. The median return on average assets across all federally insured credit unions was 36 basis points.

Factors positively impacting ROA during the quarter were net interest margin and fees and other income, while those factors that negatively affected ROA were operating expenses and provisions for loan and lease losses.

Net Worth Increased by 2 Percent During the Second Quarter

During the second quarter of 2018, the industry's net worth increased by $2.8 billion to $145.9 billion.

While the industry's net worth ratio fell by 5 basis points from a year ago, it was up 11 basis points to 10.80 percent compared to the first quarter.

As of June 2018, 97.51 percent of credit unions had a net worth ratio of at least 7 percent -- the minimum requirement for being well capitalized. However, 6 credit unions were critically undercapitalized with a net worth ratio below 2 percent. In comparison, no credit union was critically undercapitalized at the end of the first quarter.

Delinquency Rate Rose, Net Charge-off Rate Virtually Unchanged

Delinquent loans increased 12.3 percent during the second quarter of 2018 to $6.84 billion. The delinquency rate rose 6 basis points during the second quarter to 0.75 percent.

As of mid-year, credit unions reported $2.5 billion in net charge-offs. The net charge-off rate was 0.57 percent -- virtually unchanged from the the first quarter.

Federally-insured credit unions reported a 2.5 percent increase in their allowance for loan and lease losses (ALLL). As of June 2018, the industry reported ALLL of $8.15 billion.

As of June 2018, the industry's coverage ratio (ALLL to delinquent loans) was 119.08 percent.

Large Credit Unions Prospered, While Smaller Credit Unions Struggled

The National Credit Union Administration reported that 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 2018. On the other hand, credit unions with less than $50 million in assets reported declines in loans, membership and net worth over the year.

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Title : Federally-Insured CUs Post Y-o-Y Double Digit Loan Growth "Credit News 24"
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