NCUA 2005 Stats: Loan Growth High, Savings Growth Low

ALEXANDRIA, Va.-The year-end statistics released last week by NCUA provided the picture of a strong and growing credit union system. Loan growth was high at 10.62%, its largest jump in a number of years. Specifically, the two largest income producing categories for credit unions showed a 17% increase in new auto loans while first mortgages rose 11.4% or to $145 billion. The amount of fixed rate mortgage loans granted and outstanding increased 9.9% and 9.5% respectively. In 2004, fixed mortgages granted were down nearly 50% and loans outstanding were up just 2.9%. This is a reflection of the movement away from adjustable rate mortgages as rates crept ever so slowly upward this year. ARMs granted dropped 3.3% after increasing by nearly 20% last year. Growth in ARMs outstanding dropped to 15.4% after reaching 31.6% last year. New vehicle lending outpaced used as it has for the last two years. The smaller loan categories expanded in 2005 as well. Member business loans granted in 2005 grew 13% to $7.7 billion and member business loan volume grew 33.5% to $18 billion. Credit cards grew 6.3% to $23.9 billion and other unsecured loans grew 1.4% to $21.2 billion. NCUA pointed out that the loan delinquency ratio remains low at 0.73%, and the net charge-off ratio increased slightly from 0.53% to 0.54% in 2005. With the enactment of the bankruptcy reform, loans charged off due to bankruptcy jumped up 21% in 2005 from a decline of 2.6% in 2004. The number of members filing for bankruptcy protection went from a 0.6% decline in 2004 to a 32.2% increase last year. The amount of loans subject to bankruptcy was $2.6 billion, up 15.8%. Credit union share growth put in its weakest performance in a number of years at just 3.83% to $577.4 billion in 2005. As regular shares declined 3.7%, share certificates sharply increased 20.4% to $152.6 billion by year-end 2005. Asset growth was up just 4.90% in 2005, compared with 6.04% the previous year and 14.45% in 2001. In 2005, the loan to share ratio climbed to 79.4% as loans grew nearly $44 billion. "The strong pace of loan growth is an excellent indication that credit unions are fulfilling their mission of being the source of affordable loans for their members," NCUA Chairman JoAnn Johnson stated. "What's more, net worth continues to grow at a consistent, healthy level, which indicates credit unions are effectively managing their balance sheets." Credit unions' return on average assets has been falling in recent years and 2005 was no exception. NCUA reported a 0.85% percent ROA, which has decreased steadily from 1.07% in 2002. The agency blamed this on increases in operating expenses and provision for loan and lease loss expenses. Meanwhile, credit unions' aggregate net worth ratio climbed to 11.24% in 2005. In other stats: * Investments decreased 7.31%, to $148 billion from $159.6 billion; * Net worth increased 7.6%, to $76.3 billion from $70.9 billion; and * Membership increased 1.5%, to 84.8 million members. -