ALEXANDRIA, Va. -
NCUA reported that net income plunged 7.4% in the first quarter as lending was flat, pushing return-on-average assets down to just 0.73%. That's down from 0.82% in the fourth quarter of 2006, 0.88% in the third quarter, and 0.81% for the second quarter of last year. NCUA attributed the lower earnings to stagnant loan growth - just 0.2% in the first quarter - continued increase in cost-of-funds, the rates credit unions pay their members.
Mike Schenk, senior economist at CUNA, said other factors have also contributed to the shrinking ROAA, including the continuation of the flat yield curve, as well as NCUA's Letter to Credit Unions last year downplaying the importance of profitability, in which it said a 1% ROA is no longer required to gain a CAMEL 1 rating.
"There is some seasonality to it," Schenk told the Credit Union Journal. "But some of it is a reflection of what the agency did last year with its Letter to Federal Credit Unions on earnings."
NCUA said shares increased a strong 4.2% in the first quarter, pushing up assets by 3.4%, while membership increased by 0.5%.
Meanwhile, other analysis of first-quarter Call Report data by NCUA found that overall membership has grown to 86 million during the first quarter, which closed with 8,305 CUs reporting.
"Epitomizing the good health of the financial system, during the first quarter of 2007 federally insured credit union assets grew 3.4% and savings expanded a strong 4.2%," Chairman JoAnn Johnson said in a released statement. "What's more, while loan growth was marginal, loan performance was strong as noted by the 4.7% decline in delinquencies and net charge-offs."
The Specifics
Among the stats from the first quarter:
* The 3.4% increase in assets represented growth to $734.3 billion.
* The loan increase of 0.2% meant a total loan portfolio of $495.4 billion.
* Investments were up 3.5% to $139.2 billion from $134.5 billion.
* Shares increased 4.2% to $626.3 billion from $601.2 billion.
* Net worth increased 1.5% to $ 83.2 billion from $82.0 billion.
* Membership increased .5% to 86.1 million members
* Share accounts grew across the board, up 4.3% to $364.8 billion in the first three months of 2007. Regular shares grew 3.2% to $187.1 billion and share drafts grew 6.1% to $74.4 billion.
* First mortgage real estate loans grew 2.0% to $162.9 billion while other real estate loans grew 0.4% to $84.7 billion. Other lending categories showed slight declines as, tracking historic trends, lending slowed in the first quarter. New auto loans declined a slight 0.8% to $87.8 billion while used auto loans declined 0.2% to $87.4 billion.
Still strong, while trending somewhat lower, the quarter ended with credit unions reporting an annualized return on average assets of 0.73% as increased cost of funds and slower-paced lending saw net income decline by an annualized 7.43%.
To See More Of The Data
For a look at all the data: www.ncua.gov/data/FOIA/foia.html
