ALEXANDRIA, Va.-NCUA stated that credit unions are strong and healthy, but continued success lies in balancing the balance sheets while keeping an eye on net worth. "Federally insured credit unions continued their strong performance in 2005," NCUA's year-end report concluded. "This is reflected by record net worth levels and healthy earnings. Credit unions achieved favorable operating results despite a flattening yield curve, which reduced the net interest margin." The report added, "Continued success depends on how well individual credit unions manage their balance sheets while monitoring net worth. However, it may be necessary to adjust operations to adapt to this ever-changing financial environment." Federally insured credit unions' net worth increased $5.38 billion last year, or 7.59%, leading to an increase in the net worth ratio from 10.96% to 11.24% due to positive earnings, slowed asset growth, and controlled loan losses, according to NCUA. Loans got a giant boost in 2005, with growth of 10.60%, or $44.0 billion. Mortgage loans led the way with an increase of $14.9 billion (11.40%) followed by new car loans at $12.7 billion (17.80%). This bumped the loan-to-share ratio up from 74.49% at year-end 2004, to 79.36% at the end of last year. Shares were up just 3.8% with the largest growth reported in certificates (20.4% or $25.9 billion). At the same time, the number of delinquent loans increased by $360 million, or 12.1%. However, the ratio of delinquent loans to total loans was up only slightly from 0.72% to 0.73% by year-end 2005. Net charge offs were also up $245 million, but level relative to loan growth. As expected with the enactment of the new bankruptcy reform law, federally insured credit unions reported an increase of 34.2% in bankruptcy filings. Bankruptcies represented $2.6 billion in outstanding loans last year and accounted for 36.64% of all charge offs. Earnings on loans and investments were up 9.1% and 18.3%, respectively, but that was not enough to aid credit unions' waning return on average assets, which sank six basis points to 0.85%. – [email protected]