ALEXANDRIA, Va. -- Federally insured credit unions saw an increase in the net worth ratio and return on assets over the first half of the year, while the aggregate net interest margin continued to get squeezed.
"Federally insured credit unions continued strong performance in the second quarter of 2006. Loans, shares, and net worth grew while delinquency, loan losses and bankruptcies declined," according to recently released NCUA data on trends in federally insured credit unions.
Assets jumped up $18.32 billion to $697 billion, or 2.70%, in the first half. At the same time the net worth ratio got a boost from 11.24% at year-end 2005 to 11.36% as of June 30 from a nearly $3 billion increase in net worth. Mortgages continued to lead the way in growth while new and used vehicle loans dipped (See chart).
Loans continued to grow at 3.96% January through June 2006, or 7.68% annualized, pushing the loan-to-share ratio to 80.24%. Meanwhile delinquencies continue to fall, dropping from 0.73% at year-end 2005 to 0.58% through June of this year.
"While net interest margins remain low, credit unions achieved favorable operating results as the loan to share ratio grew to over 80%," NCUA said. Federally insured credit unions' net interest margins pinched even smaller over the first half from 3.24% at year-end to 3.19%.
However, overall, return on assets crept up from 0.85% to 0.86%. "The combination of a 10 basis point decline in the provision for loan loss expense, a 2 basis point increase in fee/other income, and slightly lower non-operating income resulted in a 1 basis point increase to the return on assets of 0.86%," the agency reported.
On the investment side, credit unions are going shorter with a 3.46% increase in cash and investments under one year and a 5.70% decrease in investments over one year in maturity. --scooke@cutimes.com
