Credit unions with fewer than $10 million in assets gained net worth in the second quarter of 2014, but trailed behind larger credit unions in loan growth, net worth growth, membership and return on average assets, the NCUA reported Tuesday.

Overall, federally insured credit unions had the highest year-over-year loan growth since 2006, with lending increasing in every category, according to call report data ending June 30. Outstanding loan balances rose 9.8% from the second quarter of 2013 to $673.9 billion. New auto loans grew the most, increasing 17% to $77.7 billion.

Total investments by federally insured credit unions decreased 2.7% from the second quarter of 2013. Total investments as a share of assets dropped nearly 2% from the second quarter of 2013 and long-term investments did not change.

“Though stabilizing as a share of assets, high levels of long-term investments in the asset portfolio could pose interest-rate risk for federally insured credit unions as interest rates rise,” the agency said.

Membership at federally insured credit unions reached a new high of 98 million in the second quarter of 2014, growing 909,452.

However, the amount of federally insured credit unions dropped to 6,429 at the end of the second quarter 2014 – 252 fewer than the second quarter of 2013.

The aggregate net worth ratio for federally insured credit unions in the second quarter of 2014 was 10.77%, representing a 27 basis point increase compared to the second quarter of 2013.

“Overall, federally insured credit unions remain well-capitalized, with 97% reporting a net worth at or above the statutorily required 7%, compared to 96.2% at the end of the second quarter of 2013,” the NCUA said. “Less than 1% of federally insured credit unions are below the adequately capitalized standard.”

Total assets grew 4.5%, or $47.3 billion, from the second quarter of 2013, increasing to more than $1.1 trillion for the first time. Share and deposit accounts decreased but were still 3.4% higher than at the end of the second quarter of 2013.

“The industry's net long-term asset ratio remained high – 35.4% – so interest-rate risk remains a serious threat,” the agency warned.

Large credit unions with more than $500 million in assets continued to grow but smaller credit unions declined in many key categories.

“These 448 credit unions held $760 billion in combined assets, 69% of the system's total assets during the quarter. They also reported faster growth and higher returns on average assets than the credit union system as a whole,” the NCUA reported.

According to the NCUA's data for the second quarter of 2014, the 2,068 credit unions with fewer than $10 million in assets saw a 1.1% growth in net worth, compared to 9.2% for credit unions with more than $500 million in assets.

Loan growth at credit unions with fewer than $10 million in assets was 1.5% during the same period and 12.1% for the nation's largest credit unions.

“A stronger economy and a stronger credit union system go hand-in-hand. Credit unions continue to make the loans that help people buy cars and homes, pay college tuition and start or expand small businesses,” NCUA Board Chairman Debbie Matz said. “However, the slight decrease in long-term investments as a share of assets over the past quarter is not enough to alleviate interest-rate risk. Long-term fixed-rate assets remain elevated, and interest-rate risk continues to be a key concern and a supervisory priority for NCUA.”

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Credit Union Size Gap Grows

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