Credit Cards Lead Anemic CU Loan Growth, NCUA Reports
Credit cards led the way in what was overall very weak credit union loan growth in the second quarter, according to data reported to the NCUA.
The regulator reported that loans at the 7445 federally insured CUs grew by only 0.1%, with the fastest growing loans those that refinanced other loans that carried higher interest rates.
Unsecured credit cards grew at 1.7%, real estate loans by 0.4%, a boost the agency attributed to a 10.8% increase in mortgage modification loans. Used vehicle loans increased, while loans for new vehicles fell, the NCUA said.
People still joined credit unions in the second quarter, with CUs adding 90.5 million new members in the quarter. However, unlike the previous quarter, fewer of the most recent new members brought their bank accounts with them. The agency reported that deposits at CUs grew by only 0.6% in the quarter.
But the agency also reported that overall delinquency and loan losses at CU "inched lower" in the second quarter, a fact which NCUA Board Chairman Debbie Matz argued could mask bad news.
"Credit unions in many areas continue to experience greater loan losses-particularly in states struggling with high unemployment, declining real estate values and failing businesses," Matz said. "These trends are also having a severe impact on many credit union members. As their debts become overwhelming, members who are dealing with job losses and foreclosures are now much more likely to file for bankruptcy."
But even as its numbers showed bankruptcies this year on track to exceed last year's and average return on average assets dropped from 0.47% in the first quarter to 0.41% in the second quarter, the agency did have some positive numbers to share. Overall, credit unions' net worth ratio held steady at 9.9% and more than 95% still meet or surpass the statutory definition of well-capitalized. In addition, net income totaled $1.8 billion and net worth grew to $89.3 billion in the second quarter from $88.6 billion in the first.