ALEXANDRIA, Va. (3/4/14)--National Credit Union Administration 2013 call report data, released Monday, shows continued positive trends in loan, membership and net worth growth for federally insured credit unions.
Credit Union National Association President/CEO Bill Cheney said the year-end financials illustrate that "credit unions are experiencing a renaissance of sorts in lending, particularly in the new and used auto loans."
"Although credit unions never stopped lending and working with their members, they have clearly left the recession in the dust and are looking forward," Cheney noted. (See related story: Autos boost CU lending, CUNA estimates say.)
However, NCUA Chairman Debbie Matz used the release of 2013 call report data to warn credit unions not to take on "excessive" interest rate risk. She highlighted that growth in 5- to 10-year investments was nearly 60% and called it "cause for concern."
"It's easy to get trapped chasing near-term profits by increasingly concentrating investments in long terms. That can imperil a credit union because it increases interest rate risk...For many credit unions it may be prudent, at this time, to accept lower return on assets to avoid exacerbating interest rate risks," the head federal credit union regulator advised.
Investments grew to $299 billion, up from $280 billion at the beginning of 2013, then declined to $285 billion by the end of the year. The NCUA said most of that decline was in short-term investments; the most dramatic growth occurred in 5- to 10-year maturities, which increased by $14 billion, or the 60% noted above.
However, the 2013 financial reports showed strong positives, such as:
- Strong loan growth, led by auto loans, with total loans at up close to 2.2% to $645.2 billion in the fourth quarter. Loans grew nearly 8% compared to the end of 2012, and lending continued to rise in nearly every category;
- Membership grew by slightly more than 343,000 in the fourth quarter of 2013 and by more than 2.4 million for the year; and,
- Net-worth ratio climbed as credit unions remained well-capitalized. Aggregate net-worth ratio was 10.78%, the NCUA reported, up 13 basis points from the end of the third quarter, its highest level since the first quarter of 2009. The vast majority of federally insured credit unions remain well-capitalized, with 97% reporting a net worth at or above the statutorily required 7%.
Delinquency and net charge-off ratios held pretty steady and even dipped slightly in the third quarter. The delinquency ratio fell to 1.01% in the fourth quarter from 1.02% in the previous quarter and from 1.16% at the end of 2012. The net charge-off ratio remained the same during the fourth quarter at an annualized 57 basis points. The percentage of loan charge-offs due to bankruptcy also held steady at 20.5%, is below the 2012 level of 21.5%.
See the resource link for more data.