Credit union loans outstanding grew faster in the first quarter of 2013 than in any other first quarter since 2008, according to the NCUA’s quarterly industry report released Thursday.
However, small credit unions are lagging behind their larger counterparts, the report said.
Federally insured credit unions added 808,006 members in the first quarter to reach a new high of 94.6 million, the NCUA said. But while credit unions added members, the number of federally insured credit unions declined to 6,753, a drop of 66 for the quarter.
While she said the report contains many positive signs, NCUA Board Chairman Debbie Matz said she’s concerned about the disparate recovery of credit unions by asset size.
“The 423 largest credit unions had a return on average assets of 100 basis points for the quarter,” Matz said in a release. “In comparison, 2,279 credit unions with less than $10 million in assets had a return on average assets of negative 14 basis points, and 3,007 credit unions with $10 million to $100 million in assets had a return on average assets of 30 basis points.”
Credit unions with more than $500 million in assets also had net worth growth of 10.5%, loan growth of 3.1%, and membership growth of 5% during the first quarter. In comparison, the industry as a whole had net worth growth of 2%, loan growth of 0.4%, and membership growth of 0.9% during the same period.
Overall, credit unions reported $599.9 billion in total loans during the first quarter, up $2.3 billion over the previous quarter. Private student loans saw the largest increase, up 11% to $2.2 billion outstanding. First mortgage loans increased by 1% to $248.5 billion. New auto loans increased 2% to $64.6 billion, and used auto loans rose 1.5% to $116.9 billion. Net member business loan balances saw a 1.9% increase to $42.5 billion.
“We continue to remind credit unions to guard against long-term risks,” Matz said. “In particular, first mortgages, many of which are at fixed rates, grew as a share of the industry’s total loans during the quarter.
“This could lead to problems when interest rates inevitably rise. In addition, the total amount of non-federally guaranteed student loans jumped 11% for the quarter. A new line of business for many credit unions, these loans often have higher delinquencies in the long term.”
Delinquencies and charge-offs declined in the first quarter, shedding 14 basis points to 1.02%. The net charge-off ratio also dropped significantly by 12 basis points, to 0.61%. The declines reflect significant improvement from the highs of 1.84% for delinquencies and 1.21% for charge-offs reached in 2009.
While new bankruptcy filings by member increased from the previous quarter to 64,495, they remained below numbers reported one year ago. And, the percentage of loan charge-offs due to bankruptcy dropped to 19.3% from 21.5% in the previous quarter.
Total assets grew by 3.3% to $1.06 trillion in the first quarter, another record high. Industry net worth rose to $108.8 billion, up $2.1 billion for the quarter.
Because asset growth outpaced net worth growth, credit unions’ net worth ratio fell slightly during the quarter to 10.31%. The industry, however, remains well-capitalized with 95.8% of all federally insured credit unions reporting a net worth above 7%, the NCUA said.
Share and deposit accounts grew to nearly $910 billion in the first quarter, up 3.7%. Regular shares, share drafts, money market shares and non-member deposits all showed quarterly increases, while share certificates experienced a slight decline and IRA/Keogh accounts remained steady.
The industry’s return on average assets ratio fell by 3 basis points in the first quarter of 2013, but the NCUA said credit unions overall remained healthy at 83 basis points.
Complete details of the March 2013 Call Report are available online.