ALEXANDRIA, Va. — Federally insured credit unions saw anincrease in the net worth ratio and return on assets over the firsthalf of the year, while the aggregate net interest margin continuedto get squeezed.

“Federally insured credit unions continued strong performance inthe second quarter of 2006. Loans, shares, and net worth grew whiledelinquency, loan losses and bankruptcies declined,” according torecently released NCUA data on trends in federally insured creditunions.

Assets jumped up $18.32 billion to $697 billion, or 2.70%, inthe first half. At the same time the net worth ratio got a boostfrom 11.24% at year-end 2005 to 11.36% as of June 30 from a nearly$3 billion increase in net worth. Mortgages continued to lead theway in growth while new and used vehicle loans dipped (Seechart).

Loans continued to grow at 3.96% January through June 2006, or7.68% annualized, pushing the loan-to-share ratio to 80.24%.Meanwhile delinquencies continue to fall, dropping from 0.73% atyear-end 2005 to 0.58% through June of this year.

“While net interest margins remain low, credit unions achievedfavorable operating results as the loan to share ratio grew to over80%,” NCUA said. Federally insured credit unions' net interestmargins pinched even smaller over the first half from 3.24% atyear-end to 3.19%.

However, overall, return on assets crept up from 0.85% to 0.86%.“The combination of a 10 basis point decline in the provision forloan loss expense, a 2 basis point increase in fee/other income,and slightly lower non-operating income resulted in a 1 basis pointincrease to the return on assets of 0.86%,” the agencyreported.

On the investment side, credit unions are going shorter with a3.46% increase in cash and investments under one year and a 5.70%decrease in investments over one year in maturity.–[email protected]