Credit Union Loan Growth at Nine-Year High

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Loan growth at federally insured credit unions in 2014 climbed to the highest level since 2005, the National Credit Union Administration reported today.

The table provides a summary of federally insured credit unions’ current ratios and growth from the fourth quarter of 2013 to the fourth quarter of 2014 by asset size for selected metrics.

“2014 was a very productive year for America’s credit unions,” NCUA Board Chairman Debbie Matz said.

Loan growth at federally insured credit unions in 2014 climbed to the highest level since 2005, the National Credit Union Administration reported today.

“2014 was a very productive year for America’s credit unions,” NCUA Board Chairman Debbie Matz said. “As economic growth stimulated loan demand, credit union loans met the needs of millions of members, strengthened their communities and created jobs that will further boost the economy. Loan growth also helped credit unions reduce reliance on long-term investments to generate income. However, credit unions must remain prepared when interest rates rise.”

Membership, assets, deposits and net worth saw continued positive growth in the fourth quarter of 2014. Net interest margins held steady from the previous quarter and were slightly higher than at the end of 2013. NCUA today released the new figures based on Call Report data submitted to and compiled by the agency for the quarter ending Dec. 31, 2014.

Loan Growth Records Largest Percentage Increase Since 2005
Outstanding loan balances at federally insured credit unions grew 10.4 percent between the end of 2013 and the end of 2014, the largest year-over-year percentage increase since the end of 2005. Total loans reached $712.3 billion.

Loans grew across asset sizes and in every major category, including:

  • Total first mortgage loans outstanding reached $292.2 billion, up 2.0 percent from the previous quarter and up 8.8 percent from the fourth quarter of 2013. Fixed-rate first mortgage loans represented 59.6 percent of first mortgage loans outstanding at the end of 2014.
  • Second mortgage loans reached $72 billion, up 0.7 percent from the previous quarter and up 2.3 percent from the end of 2014.
  • New auto loans grew to $86.3 billion, up 4.8 percent from the previous quarter and up nearly 21 percent from the fourth quarter of 2013.
  • Used auto loans increased to more than $143.7 billion, up 2.4 percent from the previous quarter and up 12.8 percent from the fourth quarter of 2013.
  • Net member business loan balances grew to $51.7 billion, up 2.8 percent from the previous quarter and up 12.4 percent from the fourth quarter of 2013.
  • Non-federally guaranteed student loans grew to $3.1 billion, up 2.7 percent from the previous quarter and up 20.1 percent from the fourth quarter of 2013.
  • Payday alternative loans outstanding grew to $37 million, up 16.0 percent from the previous quarter and up 36.2 percent from the fourth quarter of 2013.

Loan growth lifted the overall loans-to-shares ratio to 74.9 percent, the highest level since the end of 2009.

Long-Term Investments Decline During 2014
Federally insured credit unions moved away from long-term investments during 2014. Over the course of the year, only investments with maturities between one and three years increased.

Total investments dropped to $276 billion at the end of 2014, a decline of 3.5 percent from the end of 2013. Investments declined in all categories except those with maturities of one to three years, which increased 11.8 percent from a year earlier, to $99.7 billion. Investments with maturities greater than 10 years dropped 21.6 percent from the end of 2013, to $5.6 billion.

Credit Unions Add 3 Million Members in 2014
Membership in federally insured credit unions grew by more than 551,000 in the fourth quarter of 2014 and by 3 million for the year. Membership reached a new high of 99.3 million at year-end.

Consolidation Trends Remain Steady
The number of federally insured credit unions fell to 6,273 at the end of the fourth quarter, 77 fewer than at the end of the third quarter, a decline of 1.2 percent in the quarter and 4.3 percent for the year. The decline is consistent with longstanding trends in the financial services industry.

Return on Average Assets, Net Income Above 2013
Federally insured credit unions’ return on average assets ratio stood at 80 basis points at the end of 2014, a slight decline from the previous quarter but two basis points higher than at the end of 2013.

Year-to-date net income was $8.8 billion in the fourth quarter of 2014, an increase of $648 million, or 8.0 percent, from the fourth quarter of 2013.

Net Worth Ratio Highest Since 2007, Credit Unions Remain Well-Capitalized
The aggregate net worth ratio was 10.97 percent at the end of the fourth quarter, up 20 basis points from the end of 2013 and the highest level since the third quarter of 2008.

The vast majority of federally insured credit unions remain well-capitalized, with 97.7 percent reporting a net worth at or above the statutorily required 7.0 percent leverage ratio. At the end of the fourth quarter of 2013, 97.2 percent of credit unions were well-capitalized.

Assets Continue Rise, Shares Grow for the Quarter
Asset growth in 2014 outpaced growth over the previous 12 months, with total assets reaching $1.12 trillion. Total assets grew by $60 billion, or 5.7 percent, for the year.

Overall, share and deposit accounts at federally insured credit unions rose $11.7 billion during the quarter to $951 billion, compared to $910 billion at the end of the fourth quarter of 2013. Rate-sensitive money market accounts held steady through the year.

Delinquency and Charge-Off Ratios Remain Steady
Delinquency and net charge-off ratios for federally insured credit unions held steady from the end of the previous quarter and improved since the end of 2013. The delinquency ratio fell to 0.85 percent from 1.01 percent at the end of 2013. The net charge-off ratio held steady during the fourth quarter at 49 basis points year-to-date, a decline of seven basis points from the end of 2013.

The percentage of loan charge-offs due to bankruptcy in 2014, 19.3, fell 112 basis points below the end of the fourth quarter of 2013.

Larger Credit Unions Continue Strong Performance
Federally insured credit unions with more than $500 million in assets continued to lead in most performance measures in 2014. With $781 billion in combined assets, these 450 credit unions held nearly 70 percent of all total assets at the end of the year. They also reported a higher return on average assets than credit unions as a whole.

Credit unions with assets of less than $10 million recorded higher net worth ratios and higher loan growth than they reported in 2013. These credit unions rebounded from the end of 2013 in return on average assets but saw membership decline.

For more information about the performance of federally insured credit unions, NCUA makes the complete details of the December 2014 Call Report available online here. A summary of fourth-quarter performance is available here, and financial trends data for federally insured credit unions are available here.

NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share Insurance Fund, insuring the deposits of more than 99 million account holders in all federal credit unions and the overwhelming majority of state-chartered credit unions. At MyCreditUnion.gov and Pocket Cents, NCUA also educates the public on consumer protection and financial literacy issues.

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John Fairbanks
@TheNCUA
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