The National Credit Union Administration (NCUA) recently announced that assets in the country’s 5,844 federally insured credit unions grew 8.2 percent to $1.28 trillion while membership reached 106.2 million in the quarter ending Sept. 30, 2016.
The figures are based on call report data received and compiled by the agency for the third quarter. It is the first time that credit union insured shares and deposits have topped $1 trillion.
In addition to asset growth, loans outstanding for federally insured credit unions grew 10.1 percent to $847.1 billion during that timeframe. Real estate lending, which accounted for nearly half of those total loans outstanding, jumped 8.2 percent to approximately $421 billion. Also experiencing significant percentage growth were new auto loans (up 15.8 percent to $112.2 billion), used auto loans (up 12.3 percent to $178.1 billion), net member-business loan balances (up 14.0 percent to $63.9 billion), non-federally guaranteed student loans (up 10.1 percent to $3.8 billion) and payday alternative loans originated at federal credit unions (up 9.5 percent to $129.5 million).
“By almost any measure, America’s credit unions as a whole continue to grow,” NCUA Board Chairman Rick Metsger said in a press release. “Rising credit union membership has boosted deposits and loans have continued to grow at a double-digit pace. At the same time, the overall delinquency rate has held steady and the shift away from long-term investments has continued. Despite these positive trends, federally insured credit unions must guard against risks on the horizon like rising interest rates and regional economic downturns, particularly in energy-producing states.”
The aggregate net worth ratio of credit union system remained unchanged from the second quarter to the third at 10.85 percent, which is slightly lower than the 10.99 percent mark posted in the third quarter of 2015. The percentage of “well-capitalized” credit unions also remained steady from the second quarter to the third at 97.9 percent. Less than 1 percent of federally insured credit unions were “less than adequately capitalized” in the third quarter, according to the call report data.
Large federally insured credit unions continued to lead the system in growth in the third quarter as has been the trend, according to NCUA.
“Credit unions with assets of $500 million or more led the system in most performance measures,” NCUA said. “With $938.4 billion in combined assets, these 498 credit unions held 73.5 percent of total system assets. The 4,292 credit unions with $100 million or less in assets held 8.2 percent of total system assets.
“Consistent with previous quarters, large credit unions reported the greatest growth in loans, membership and net worth, as well as the highest return on average assets. Credit unions with assets of less than $100 million saw smaller growth in net worth and loans, lower return on average assets and, for credit unions with assets of less than $10 million, declining membership.”
Low-income credit unions also saw growth in the third quarter, 7.6 percent from the previous year. Forty-two percent of federally-insured credit unions now are designated “low-income” and nearly 36 percent of credit union members belong to a low-income credit union.
Contrasting with trending growth in many aspects, total investments by federally-insured credit unions dropped 1.4 percent from the third quarter of 2015 to $266.3 billion at the end of the third quarter of 2016. While investments with maturities less than one year grew (up 11.5 percent to $75 billion) during that time, longer-term investments declined, including investments with maturities of one to three years (down 4.5 percent to $100.7 billion), investments with maturities of three to 10 years (down 6.4 percent to $87 billion) and particularly significant declines in investments with maturities greater than 10 years (down 19.7 percent to $3.6 billion).
The system’s ratio of net long-term assets to total assets was 32 percent at the end of the third quarter, down from 32.4 percent a year earlier.
The total number of federally insured credit unions declined 246 from the previous year. NCUA primarily attributes this decline to consolidation, typically resulting from mergers. Roughly 70 percent of the decline occurred among credit unions with less than $10 million in assets.