NCUA Board Chairman Debbie Matz said Friday that the credit union industry’s $8.5 billion record profit in 2012, along with other key financials, made for a “pivotal year” and said there are many reasons to be optimistic about the future.
However, she also warned against interest rate risk due to a concentration of fixed rate mortgages on credit union books.
“Credit unions had a pivotal year in 2012,” Matz said as the agency released its 2012 year-ending Call Report data. “The industry generated record earnings, assets crossed the $1 trillion mark and membership grew by more than 2 million.”
The record $8.5 billion net income represents a 36.1% increase from the $6.3 billion reported in 2011, the NCUA said. The increase came largely from reductions in loan loss reserves, a sign of improving economic conditions.
Federal credit unions reported $597.7 billion in outstanding loans at year-end, a 4.6% increase for the year. First mortgage loans, by far the industry’s largest outstanding loan category, increased 5.7% for the year to reach $246.3 billion. Used auto loans rose 7.9% for the year to $115.2 billion, and new auto loans grew 8.7% to $63.3 billion.
Net member business loan balances expanded 6.5% for the year to $41.7 billion.
The fastest growing loan category for credit unions in 2012 was private student loans, which jumped 35.6% for the year. Private student loans have experienced rising delinquency rates overall, but credit union market share outstanding is only a little more than $2 billion.
Payday alternative loans reached $21.3 million at the end of 2012, up 15.2% for the year.
Growth was most robust in credit unions with assets above $250 million. This group of 751 credit unions showed the largest gains in nearly every category, including membership, net worth, market share, loans and assets.
Overall, federal credit union membership grew to 93.8 million in 2012. Total assets were slightly over $1 trillion, the agency said.