ALEXANDRIA, Va. — As the economy has continued to correct itself over the last six months, credit unions have made gains in savings while lending is slowing from its record pace of the last couple years.
From year-end 2005 through June 30, credit union assets increased 2.7% with loans up 4.0% and shares growing 2.8%, despite a 0.2% decrease in savings over the second quarter. The collective net worth ratio stood at 11.36% over the first half of the year, up from 11.24% at year-end. Additionally, membership increased 1.0% to 85.4 million members of federally insured credit unions.
"In the first six months of 2006, shares grew an annualized 5.56 percent and loans grew an annualized 7.91 percent," NCUA Chairman JoAnn Johnson said. "Meeting member's needs is the mission of credit unions and thanks to reliable, expert member service I'm happy to report that as of June 2006 federally insured credit unions serve more than 85 million members."
Since loan growth exceeded share growth, the loan-to-share ratio bumped up to 80.24%. First mortgages and other real estate loans grew 5.7% and 8.0%, respectively. New auto loans were also up 3.1% over the first six months. Total shares were up based on a 1.1% increase in regular shares and a 9.4% increase in share certificates. Meanwhile, money markets declined 0.2% and share drafts fell 3.7%.
Though he had not completely finished analyzing the data in time for press time, Callahan & Associates Industry Analyst Tom Geggel commented, "What we've observed is that loan growth continues to be pretty strong." He noted that mortgages remain strong for credit unions but pointed out that NCUA has added several account codes to its Call Reports particularly looking at delinquencies and foreclosures.
Though asset quality remained stable, the true test will be as housing and car loans drop off more rapidly. "The telltale figures for asset quality will be over the next year rather than over the last three months," NAFCU Senior Economist Jeff Taylor said.
All this activity led to a jump in return on assets to 0.90%, up from 0.81% at the end of the first quarter. "The thing that did stick out was that earnings were up," Taylor highlighted as surprising. That likely means credit unions are chasing CDs for the long-term money to fund loans and keeping their cost of funds down, he hypothesized.
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