Third-quarter Call Report information released Thursday by the NCUA shows that while the number of credit unions continues to fall, the financial condition of those remaining continues to improve.
The industry saw gains in lending, loan quality, membership, net worth and assets.
Credit unions hungry for loan activity saw continued improvement in the third quarter, with outstanding loans growing 1.6% to $591.1 billion outstanding, a $9.4 billion gain from the previous quarter. That follows a similar 1.7% increase in the second quarter. Total loans have increased for six consecutive quarters, the NCUA said.
Broken down by loan category, private student loans increased the most, posting a 12.83% gain during the 3rd quarter and a nearly 38% annualized increase. Payday alternative loans marked the second largest gain, with a 5.2% increase during the quarter ending Sept. 30.
The credit union bread-and-butter loan category, autos, also saw gains in the third quarter. New auto loans climbed 3.3% and used auto loans rose 2.7%.
First mortgages increased by 1.3% and member business lending increased by 1.5% to $40.8 billion outstanding. The only lending category that saw a decrease was a slight dip in “other” real estate loans, which represents equity lending.
As outstanding loans increased, so did loan quality: delinquency fell 3 basis points to 1.17% and net charge offs dropped by 2 basis points to 0.73%. This is the third consecutive quarter that delinquencies and charge-offs have decreased, the NCUA said.
New bankruptcy filings by members were very encouraging, with a 15.2% decrease in members filing for bankruptcy protection. However, charge-offs due to bankruptcy – 21.5% – remained the same.
Membership increased by 742,847 to 93.9 million as of Sept. 30, a quarterly growth rate of 0.8%. However, the trend of industry consolidation continued with, the number of federally insured credit unions declining from 6,961 to 6,888.
Net worth increased 2% to $104.5 billion, an increase of $2.1 billion for the quarter. The resulting average capital ratio was 10.31%.
“Third-quarter statistics show the credit union industry continues to recover from the economic downturn,” NCUA Board Chairman Debbie Matz said. “Consumers increasingly chose credit unions as their financial services providers. Ongoing growth in lending, continued declines in delinquencies and charge-offs, and strong net income year-to-date all demonstrate a strengthening economy.”
Net income declined slightly, by 0.2%, but year-to-date net income of $6.4 billion as of Sept. 30 is still higher than 2011's year-end figure of $6.3 billion, the NCUA said. Return on average assets ratio remained the same at 86 basis points.
Total assets grew by $5.3 billion to end the third quarter at $1.0129 trillion. Total share accounts rose modestly, growing by $928.9 million to $869.7 billion. Money market shares grew by 0.9%, non-member deposits increased by 0.7%, and IRA/Keogh accounts rose by 0.6%.
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