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Credit Unions Weigh In On NCUA's Encouraging Statistics

Credit Unions Weigh In On NCUA's Encouraging Statistics By Gina Ragusa
Published December 12, 2011
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Earlier this month the National Credit Union Administration (NCUA) reported positive growth and development information that points directly to the health and vitality of the country’s credit unions.

Overall nearly every key indicator of credit union growth increased or held steady over third quarter 2011, according to the Call Report which retrieves data from approximately 7,179 federally insured credit unions.

Debbie Matz, NCUA Board Chairman said, “In the third quarter, credit union financials continued to move in the right direction. Membership, assets, and net worth all rose, and I am especially pleased that the net worth ratio inched upward to 10.15%. While credit union deposits and loans both increased during the quarter, deposits grew at a faster pace. As a result, the loan-to-share ratio dropped slightly. Net income growth also slowed. However, net income during the first nine months of 2011 has already exceeded net income for all of 2010.”

Report Highlights

In each category, evidence of the powerful credit union movement was apparent:

  • Membership increased by nearly 1 million during the first nine months of 2011, adding more than 450,000 new members in third quarter alone. Today 91.4 million consumers do business with a credit union.
  • Asset growth rose increasing by $8.7 billion in third quarter, holding at $951.1 billion on September 30.
  • Net worth ratio grew minimally, rising 1 basis point during third quarter, going from 10.14% to 10.15%.
  • Return on Assets Ratio fell slightly at 66 basis points today, down from 77 basis points during the second quarter. The report pointed out that despite the decline, the current ROA is still 15 basis points higher today as compared to year-end in 2010.
  • Shares are on the rise. Checking, savings and money market shares contributed to a $7 billion increase in third quarter, now standing at $819.2 billion on September 30. Share certificates and non-member deposits dropped slightly.
  • Lending showed a mixed bag but increased $3.1 billion in third quarter holding at $567.1 billion today. Declines were reported with new auto loans, and various real estate loans, however credit cards, used vehicle loans, unsecured loans and first mortgages experienced a lift. Non-federally guaranteed student loan demand increased 20.5% during third quarter, standing at $1.3 billion by September 30.
  • Delinquencies increased only slightly during third quarter, a boost by 1 basis point. Net charge offs dropped again, decreasing by 4 basis points from June 30 to 0.91% at the end of third quarter.
  • Bankruptcies also decreased during third quarter, dropping 26.7% as compared to second quarter. Credit unions reported that 56,572 members filed for bankruptcy during third quarter and the percentage of loans charged off due to bankruptcy dropped by 14 basis points to stand at 23.95% of all loans charged off.

Credit Unions Report Membership and Asset Growth Strong Across the Board

Across the country, credit unions report somewhat similar growth statistics. Frank Nelson, CEO of 1st Financial Federal Credit Union ($210 million, Wentzville, MO) describes substantial membership growth statistics. “Our membership has grown by 11.1% in 2011, and 6.6% in the 3nd quarter alone.”

Donna LoStocco, Vice President Member Experience at Affinity Federal Credit Union ($2 billion, Basking Ridge, NJ) reports that her credit union added 2,690 new members; 8,183 members were added in the first nine months of 2011.

According to Glenn Kirk, EVP of Marketing & Business Development at Summit Credit Union ($130.5 million, Greensboro, NC), the big membership boon coincided with Bank Transfer Day.

“Membership has grown by roughly 5% from January 1 through November,” Kirk explains. “We typically see an increase of 50 to 100 net members each month, but saw a member growth spike during October and November of roughly 800 net new members (total of both months). This came at the time when the banks were announcing their debit card fees. We expect that trend to continue because our members who still have bank accounts tell us that they are now uneasy and expecting bank fees to start early next year.”

Assets have also been a strong point for most credit unions. Kirk says that Summit’s have increased by 8.2% and totaled $130.5 million at the end of November. “We will have another jump of roughly $4 million in December due to the merger of another credit union.”

LoStocco says that Affinity has also increased assets by 0.97% in the third quarter 2011. Nelson reports a 2.02% growth this year as well.

Credit Unions Have No Problem Balancing Shares with Loans

Nelson explains that while shares have increased slightly, it’s more about providing exceptional value for all members’ financial needs. “Shares have increased at a slightly faster pace than loans. 2.18% versus 1.62% respectively,” he says. “We have made a conscious effort to provide a great overall value to our members, whether they are borrowers or savers. I think that these growth figures demonstrate that people in our community are finding 1st Financial to be a better value than our competitors.”

LoStocco states that Affinity’s share to loan balance has been consistent. “Our third quarter share growthwas 1.11%, about the same as Affinity's loan growth for the same period (not including loan sales). The majority of our share growth was within ourchecking products.”

LoStocco adds that Affinity grew in all areas (net worth, assets, shares, investments and loans.) “Total Checking balances increased 7.1% for the quarter or $21.1 million.”

Kirk also reports balanced increases on both sides. “Not a significant difference,” he says. “Through November our deposits have increased by $8.6 million, or 7.89% ($117.5 million); compared to loans which have increased by $7.5 million, or 8.01% ($101.1 million). Our loan to share ratio has increased from 85.9% to 86.1%.”

To some this may not seem like a significant increase, but we are definitely bucking the industry trend by increasing outstanding loans,” Kirk continues. “We have done this primarily in auto loans and mortgages, both showing roughly a $4 million increase since January 1.”

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