Dollar Reveals Impressive 2003 Year-End CU Data

WASHINGTON- NCUA Chairman Dennis Dollar unveiled the agency’s year-end numbers for 2003, which displayed the strength of federally insured credit unions, at CUNA’s Governmental Affairs Conference last week. The chairman pointed out that credit union membership has expanded from 79.3 million in 2001 to 82.4 million as of year-end 2003. At the same time, credit union assets rose from $502 billion to $610 billion, he said. Dollar emphasized that the recent flight to safety “has manifested itself in a vote of confidence for credit unions.” Also significant is credit unions’ net worth growth from $54.3 billion in 2001 to $65.4 billion at the end of last year setting a ratio of 10.83% for 2001 and 10.72% in 2003. Dollar pointed out that he raised the issue of risk-weighted capital at last year’s GAC and noted the introduction of legislation, the Credit Union Regulatory Improvements Act, that includes this principle. Prior to H.R. 1151, credit unions did follow a risk-based capital system, Dollar highlighted. In 1991, credit unions net worth ratio stood at 6.3%, which grew to 9.2% by 1995 and reached 10.9% in 1998. “Credit union managers have proven their ability to manage risk,” he stated, adding that state and federal regulators have proven their ability to supervise these credit unions. However, after the addition of Prompt Corrective Action requirements for credit unions, the net worth sits at 10.7%. While Dollar admitted it was not a significant drop from 1998 and there was a lot of deposit activity in the interim period, in the context of the previous increases the number does stick out. Dollar also underscored that if credit unions had been taxed over the last 10 years, their net worth would be only $51 billion as opposed to its current $65 billion and the net worth ratio would be 8.42% in contrast to the 10.72% where it is currently. Preliminary call report data subsequently released by the agency showed that loan growth actually outpaced share growth for the first time in three years. “The end-of-year 2003 numbers show that the credit union industry’s safety and soundness position remains extremely strong and well positioned for the year ahead,” Dollar commented. “Along with the impressive savings and asset growth that we have seen over the past several years, the 2003 performance in lending, delinquency and overall net worth also provides an extremely positive report. These numbers bode well for 2004 and demonstrate that credit unions are building their member service performance on the strongest of financial foundations.” Loans increased 9.74%, up from $342.70 to $376.08 billion. First mortgages surged 16.6% in 2003 to $117.48 billion, NCUA reported. Used auto loans came in second in lending at 11.5% growth. However, the largest percentage of growth was a 47.7% increase in member business loans, which increased from $6.67 billion to $8.87 billion in 2003. Savings were still strong at 9.10% in 2003, increasing from $484.21 to $528.29 billion. Savings increased across the board last year with the strongest growth exhibited in the money market shares at 15%, but share drafts and regular shares grew at 12.8% and 11.5%, respectively. Other key data for 2003: * Assets increased 9.5%, up from $557.15 to $610.10 billion; * Investments increased 14.6%, up from $140.21 to $160.79 billion; * Net worth increased 9.5%, up from $59.70 to $65.41 billion; * Net worth to total assets ratio increased from 10.71 to 10.72%; * Loan to share ratio increased from 70.78 to 71.19%; and the * Delinquency ratio declined from 0.79 to 0.77%. The call report information added branching data for this year. Branches of federal insured credit unions totaled 18,780, while 1,133 federally insured credit unions reported that they are members in shared branches. [email protected]