Second Quarter Call Reports Show Loan Growth, But Fewer Credit Unions
Even though most credit unions are still searching for ways to grow their loan portfolio, federally insured credit unions are adding more loans to their books, according to second quarter call report data compiled by the NCUA and released Friday.
Credit unions booked $581.7 billion in outstanding total loans during the second quarter, an increase of 1.7%, the NCUA said. Total loans by credit unions have increased for five consecutive quarters. Loans for first mortgages increased by 1.7% between April 1 and June 30, 2012, while new and used auto loans each rose by 2.8%.
Member business lending increased by 1.2% to $40.2 billion as of June 30, up from $39.7 billion as of March 31. Additionally, short-term small loans grew by 23.9% to $16.7 million.
“Lending is the investment needed to support a recovering economy. So, the largest quarterly increase since the fall of 2008 demonstrates that credit unions are playing an important role in efforts to create jobs, stimulate small businesses and revitalize communities,” said NCUA Board Chairman Debbie Matz.
She added that credit union performance numbers improved during the second quarter in every category, as assets, earnings, and net worth rose, while charge-offs, bankruptcy filings, and loan loss reserves declined.
During the quarter, membership increased by $643,322 to reach a new record high of 93 million. An additional $2.7 billion in savings were deposited during the second quarter. Total savings rose 0.3% to $868.8 billion.
The trend of larger, but fewer credit unions continued during the reporting period. Total assets grew by $5.9 billion to a new record high of $1.0076 trillion; however, the industry lost 59 federally insured credit unions, slipping below the 7,000 mark for a new industry total of 6,960.
Net worth continues to recover from the financial meltdown’s loan losses and corporate assessments, increasing by 15 basis points during the second quarter to 10.16%.
ROAA saw a slight increase of one basis point over the previous quarter. Credit unions generated $59.7 million more in quarterly net income, and the NCUA credited increases in fee income and declines in cost of funds and loan losses.
Delinquencies fell 24 basis points to 1.20% of total loans. The NCUA said its recent troubled debt restructuring rule is behind the impressive improvement. The rule allows credit unions to modify loans without having to classify TDRs as delinquent until the member makes six consecutive on-time monthly payments.
Net charge-offs fell by three basis points to 0.75% of average loans. New bankruptcy filings by members also declined 17.3% to 58,386 members filing for bankruptcy during the quarter. However, loans charged off due to bankruptcy rose slightly, to 21.4%, up from 20.8% during the first quarter.