COVID taking a toll: 8 takeaways from NCUA’s Q2 state-level data

Credit unions are finally beginning to see the full impact of the coronavirus pandemic on their bottom line.

Recent data from the National Credit Union Administration showed how the industry has been affected by rising deposits, reduced loan volumes and more.

The agency's latest Quarterly Map Review, released earlier this week, offers a state-level look at how those trends are trickling down. Some regions fared better than others, while some states — such as Louisiana and New Jersey — saw continuations of challenges that began long before the pandemic.

Read on for highlights from the report. A look at data from the first quarter can be found here.

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Roughly half of all CUs have fewer members
Overall credit union membership grew during the year ending June 30, but that growth was primarily seen at credit unions over $1 billion in assets, according to NCUA’s Quarterly Credit Union Data Summary.

At the median, however, membership declined 0.3%, compared with no change between Q2 2018 and 2019. About half of federally insured CUs had fewer members at the end of June than they did one year earlier.

Those losing members tend to be small, the agency said, noting that nearly 70% of those with declining rosters had under $50 million in assets. Credit unions in that asset range make up about 54% of total institutions.

For those who did see membership increase, credit unions in Alaska and Idaho had the highest median membership growth, at 3.1% and 2.1%, respectively. But 25 states and Washington, D.C., saw a decline in median membership, with New Jersey (-1.7%) and Pennsylvania (-1.4%) seeing the most significant drops.
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Median deposit growth rises by over 900%
Median growth in shares and deposits was also up substantially, rising 10 percentage points to end the second quarter at 11.1%.

Maine and Wyoming saw the highest growth rates, rising 17.4% and 17%, respectively.

Louisiana and Washington, D.C., grew shares and deposits the slowest, at a median growth rate of 6.5%. Those two states also saw some of the nation’s slowest asset growth. New Jersey followed them with median deposit growth of 6.8%.
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Assets go through the roof
Credit unions finished the year ending June 30 with a significant jump in assets, rising from median national asset growth of 1.7% at the end of the second quarter last year to 10%.

Median asset growth was the highest in Vermont at 15.3%, followed by Nevada at 15.2%. At the opposite end of the spectrum, Louisiana and New Jersey had the slowest asset growth (6.1% each) followed by Arkansas and Washington, D.C., both of which saw median growth rates of 6.6%.
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Lending stalls
Lending continues to slow, with median loan growth falling from 4.6% one year ago to just 0.2% at the end of the second quarter. Nearly every category of lending has slowed, according to multiple reports, with some analysts suggesting more than 90% of the industry’s loan growth this year has come from mortgages.

For those states where credit unions did see loan growth, Idaho and Wyoming led the way with 6.7% and 6.1% median growth rates, respectively.

New Jersey, which frequently ranks near the bottom of state-by-state performance listings, fared the worst, with lending contracting by 5.6%. It was followed by Louisiana, at -3.4%.
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Median delinquencies fall
Despite the pandemic, delinquencies continue to fall at the median. NCUA reported the median total delinquency rate at the end of June stood at 52 basis points, down from 60 basis points one year prior.

New Jersey holds the nation’s highest median delinquency rate at 141 basis points, followed by Connecticut and Mississippi, both at 85 basis points.

At the median, delinquencies are lowest in New Hampshire (23 basis points) followed by Oregon and Utah at 24 basis points.
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Loans-to-share ratio drops 7 percentage points
The median loans-to-shares ratio dropped from 70% to 63% in the year ending June 30. Idaho and Vermont had the highest median ratios, at 82% and 79%, respectively, while New Jersey (44%), Delaware, Hawaii and Pennsylvania (all 47%) rounded out the bottom.
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Fewer CUs with positive net income
The number of credit unions with positive net income fell in the year ending June 30, from 88% at the close of June 2019 to 81%. At least 65% of credit unions in every state and Washington, D.C., turned a profit during the first half of the year, NCUA reported.

While some NCUA previous quarterly state-level reports included states in which every credit union reported earnings growth, that was not the case this time around. Ninety-six percent of Oregon credit unions reported positive net income, followed by 95% in New Mexico, Vermont and Washington.

Only about two-thirds (67%) of credit unions in Arizona and Washington, D.C. reported positve net income, tied for the lowest in the nation, followed by 68% in Nebraska.
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ROA challenges
Median annualzed return on average assets dropped substantially in the year ending June 30, falling from 63 basis points a year ago to 39 points.

Utah and Idaho saw the nation’s highest annualized median ROA (73 basis points and 72 basis points, respectively) while Maryland and Nebraska (20 basis points) and Delaware (22 basis points) saw the lowest ROA.