ALEXANDRIA, Va. (2/25/09)—The National Credit Union Administration (NCUA) reported growth in federally insured credit unions’ loans and savings in 2008, though return on average assets declined as loan loss reserves were increased. Net income decreased 47.5%, based primarily on a 112.3% increase in a provision for loan and lease losses as credit unions prepare for possible losses. Significant increases in delinquencies and charge-offs indicate ongoing stress in the financial sector, NCUA said. “Membership grew and lending expanded as credit unions readily fulfill their mission of serving members in these difficult financial times,” said NCUA Chairman Michael Fryzel. “Adverse economic conditions and distress in the financial sector places credit unions at greater risk; however, net worth remains high helping to stabilize the industry. “With safety and soundness the priority, NCUA has proactively adopted a more frequent examination contact schedule and activated a national examination team with the knowledge, skill, and experience to effectively deal with current issues,” he added. Details of major balance sheet categories and membership growth in federally insured credit unions from Dec. 31, 2007, to Dec. 31, 2008:
* Assets increased 7.7% to $813.4 billion from $755.0 billion; * Loans increased 7.08% to $566.0 billion from $528.6 billion; * Investments increased 16.7% to $166.3 billion from $142.5 billion; * Shares increased 7.71% to $681.1 billion from $632.4 billion; * Net worth increased 3.26% to $88.9 billion from $86.1 billion; and * Membership increased 2.0% to 88.6 million members.
Reviewing 2008 asset figures, loan and investment activity fluctuated by category. Lending expanded in most categories, with the largest a 14.5% increase recorded in first mortgage real estate loans and lines of credit. Used vehicle loans increased 5.8% while new vehicle loans declined 6.2%. Reflecting stress in the economic sector, foreclosed real estate grew 112.4% and repossessed automobiles increased 27.8% during 2008. While both indices saw significant gains, they continue to represent a relatively low percentage of the total loan portfolio. Delinquent loans as a percentage of total loans increased to 1.37% at year-end 2008 from 0.93% at year-end 2007, while net charge-offs to average loans grew to 0.84% from 0.51%. The loan-to-share ratio remains a strong 83.1%, as total loans and total shares expanded at a similar pace. Regular shares increased 5.7% while money market shares increased 15.6%, share certificates increased 4.7% and IRA/KEOGH accounts increased 13.7% during 2008. The return on average assets ratio declined to 0.31% from 0.63% primarily due to increased funds set aside for loan and lease losses and other non-operating expenses. For more information, use the link.