It's slowing down out there (and other takeaways from NCUA data)
September 12, 2019 5:00 AM
Growth slowing down
Credit unions have enjoyed a long run of good years, but there are continued signs that a slowdown is at hand.
The National Credit Union Administration’s Quarterly State Map Review for the second quarter of 2019 shows year-over-year declines in areas such as lending, assets, and shares and deposits. And while all those areas are still seeing growth, it’s happening at a slower pace than in years past.
All of this comes as CUs face uncertainty surrounding the ongoing U.S.-China trade war, aninverted yield curve and other signs that a recession could be on the horizon . The NCUA data has some positive figures – including further declines in delinquencies and improved ROA – but some key growth metrics also come with caveats. One example of that is the share of CUs with positive net income. Though on the rise, this can be partly attributed to further consolidation in the industry as more unprofitable credit unions close their doors and merge.
A look atQ1 coverage of this same report can be found here , while coverage and analysis of a recent report on national data from NCUA can be found here .
Read on for highlights from the Q2 report.
The National Credit Union Administration’s Quarterly State Map Review for the second quarter of 2019 shows year-over-year declines in areas such as lending, assets, and shares and deposits. And while all those areas are still seeing growth, it’s happening at a slower pace than in years past.
All of this comes as CUs face uncertainty surrounding the ongoing U.S.-China trade war, an
A look at
Read on for highlights from the Q2 report.
Passman, Aaron
Net income
The percentage of institutions with positive net income continues to rise, driven in part by ongoing consolidation of credit unions. CUs that are stagnant or losing money continue to be merged into more profitable shops.
Eighty-eight percent of federally insured CUs reported positive net income in the first six months of 2019, up three percentage points from the first half of last year. NCUA reported that 70% or more credit unions in each state had positive net income.
Every credit union in Alaska, Maine, Nevada, New Hampshire and Vermont reported positive net income, along with 98% of Hawaii-based credit unions. The states with the lowest share were Arkansas (73%) and Louisiana (79%).
Eighty-eight percent of federally insured CUs reported positive net income in the first six months of 2019, up three percentage points from the first half of last year. NCUA reported that 70% or more credit unions in each state had positive net income.
Every credit union in Alaska, Maine, Nevada, New Hampshire and Vermont reported positive net income, along with 98% of Hawaii-based credit unions. The states with the lowest share were Arkansas (73%) and Louisiana (79%).
Passman, Aaron
Membership growth
Although overall membership continued to grow, almost half of credit unions posted a drop in members at the end of the second quarter compared with a year earlier. About 70% of institutions with declining members had less than $50 million in assets.
Credit unions headquartered in Nevada had the strongest median growth with a 2.5% jump, followed by Alaska at 2.4%.
However, institutions in 18 states recorded declining membership. Credit unions in Illinois, New Jersey and Pennsylvania had the largest drops at 1.3%.
Credit unions headquartered in Nevada had the strongest median growth with a 2.5% jump, followed by Alaska at 2.4%.
However, institutions in 18 states recorded declining membership. Credit unions in Illinois, New Jersey and Pennsylvania had the largest drops at 1.3%.
Passman, Aaron
Loan growth
Loan growth slowed from a year earlier, according to the NCUA data. The national median growth rate for loans outstanding was 4.6% for the year ending in the second quarter. That’s down from 5.4% a year earlier.
Credit unions in only two states posted a median decline in loans. Loans outstanding fell by 0.7% in New Jersey and 0.2% in Arkansas.
Minnesota boasted the largest increase at 7.7%, followed by Utah at 7.6%.
Credit unions in only two states posted a median decline in loans. Loans outstanding fell by 0.7% in New Jersey and 0.2% in Arkansas.
Minnesota boasted the largest increase at 7.7%, followed by Utah at 7.6%.
Passman, Aaron
Asset growth
Median national asset growth for the year ending at June 30 stood at 1.7%, with half of all federally insured credit unions reporting at least 1.7% asset growth for the year. But that figure also represents a decline from one year prior, when the median growth rate for assets stood at 2.1%.
In a continuation of long-running trends, Alaska and Idaho saw the strongest median asset growth, at 6.3% and 6.2%, respectively. New Jersey (-1.7%) and Arkansas (-0.8%) were at the bottom of the pack, while Louisiana and North Carolina were unchanged. Virginia and West Virginia saw only modest growth at 0.2% each.
In a continuation of long-running trends, Alaska and Idaho saw the strongest median asset growth, at 6.3% and 6.2%, respectively. New Jersey (-1.7%) and Arkansas (-0.8%) were at the bottom of the pack, while Louisiana and North Carolina were unchanged. Virginia and West Virginia saw only modest growth at 0.2% each.
Passman, Aaron
Shares and deposits
Median growth in shares and deposits was 1.1% for the year ending in the second quarter, according to the NCUA data. That’s down from an increase of 1.9% for the same period a year earlier.
Credit unions in Idaho had the largest gains with a median growth rate of 6.8%, followed by Alaska at 5.4%.
Eight states reported a decline in shares and deposits. Institutions in New Jersey had a median drop of 2.4% while Arkansas recorded a 1.4% decrease.
Credit unions in Idaho had the largest gains with a median growth rate of 6.8%, followed by Alaska at 5.4%.
Eight states reported a decline in shares and deposits. Institutions in New Jersey had a median drop of 2.4% while Arkansas recorded a 1.4% decrease.
Passman, Aaron
ROA
ROA was up year-over-year, with median annualized return on average assets rising nine basis points to 63 BPs for the year ending June 30.
At the state level, New Mexico saw the highest median ROA during the first half of this year (101 basis points) with Mississippi coming in second at 88 basis points. As with many indicators, New Jersey is at the bottom of the list, with ROA at just 38 basis points, followed by Connecticut at 42.
At the state level, New Mexico saw the highest median ROA during the first half of this year (101 basis points) with Mississippi coming in second at 88 basis points. As with many indicators, New Jersey is at the bottom of the list, with ROA at just 38 basis points, followed by Connecticut at 42.
Passman, Aaron
Delinquencies
The median delinquency rate for federally insured CUs continues to drop, hitting 59 basis points at the end of Q2, compared with 62 basis points one year prior.
The lowest median delinquency rates were found in New Hampshire (19 basis points) and Washington (32 basis points), while New Jersey and Washington, D.C., had the highest, with 132 and 115 basis points, respectively.
The lowest median delinquency rates were found in New Hampshire (19 basis points) and Washington (32 basis points), while New Jersey and Washington, D.C., had the highest, with 132 and 115 basis points, respectively.
Passman, Aaron
Loan-to-share ratios
The national median loan-to-share ratio hit 70% at the end of the second quarter, a four-point rise from the end of June 2018.
Alaska and Vermont led the way in this category with 89% each, while Idaho reported 88%. Delaware and New Jersey continue to lag, with 50% and 51%, respectively.
Alaska and Vermont led the way in this category with 89% each, while Idaho reported 88%. Delaware and New Jersey continue to lag, with 50% and 51%, respectively.
