ALEXANDRIA, Va.—Total loans at federally insured credit unions reached $769.5 billion at the end of the third quarter of 2015, a 3.3% jump from the second quarter; and a 10.7% surge from the third quarter of 2014, according to statistics released by NCUA.
In addition, credit unions have reduced their exposure to long-term investments, while delivering positive net income for the 23rd straight quarter.
NCUA said loans climbed across all asset sizes and in every major category. For example, new auto loans grew to $96.9 billion, up 4.4% from the previous quarter and 17.6% higher than the third quarter of 2014. Used auto loans jumped to $158.6 billion, up 3.7% from the previous quarter and a 13.1% increase from the third quarter of 2014.
In addition, total first mortgage loans outstanding reached $315.5 billion, up 3% from the previous quarter and up 10.2% from the third quarter of 2014. (Fixed-rate first mortgage loans accounted for 59% of first mortgage loans outstanding at the end of the third quarter, NCUA noted).
Other mortgage loans amounted to $73.5 billion, up 1.8% from the previous quarter and up 2.8% from the third quarter of 2014. Net member business loan balances grew to $56 billion, up 3% from the previous quarter and up 11.4% from the third quarter of 2014.
Non-federally guaranteed student loans reached $3.4 billion, up 5.1% from the previous quarter and up 11.9% from the third quarter of 2014. Finally, the volume of payday alternative loans outstanding stood at $36.1 million, up 2.7% from the previous quarter and up 13.8% from the third quarter of 2014.
The loan-to-share ratio at the end of the third quarter was at 77.5%, up two percentage points from the previous quarter and up 3.5 percentage points from the end of the third quarter of 2014.
"Lending continues to grow, which goes hand-in-hand with the continuing economic recovery," said NCUA Board Chairman Debbie Matz in a statement. She added that overall the data suggests that the credit union system "maintains its soundness while fulfilling its primary mission of providing affordable credit."
Separately, membership at federally insured credit unions soared to 102,138,141 at the end of the third quarter of 2015, an increase of 3.4 million from the end of the third quarter of 2014.
Meanwhile, as long-term consolidation progresses in the financial services industry, the number of federally insured credit unions dropped to 6,090 at the end of the third quarter, 260 less than at the end of the third quarter of 2014, a 4.1% decline.
Total investments by federally insured credit unions were at $270.3 billion at the end of the third quarter, a fall of $18.2 billion, or 6.3%, from the end of the third quarter of 2014.
Compared to a year earlier, investments declined in all duration categories except those with maturities between one and three years, NCUA added. Investments with maturities of one to three years increased by 9.5% from a year earlier, to $105.4 billion. Investments with maturities greater than 10 years dropped 25.2% from the third quarter of 2014, to $4.5 billion.
Also, the credit union system's net long-term assets ratio fell to 32.4% in the third quarter from 35.0% a year ago. Credit unions holding less than $10 million in assets had the lowest net long-term asset ratio of any peer group at 11%. In contrast, credit unions with more than $500 million in assets had a ratio of 33.4%.
"The level of exposure to long-term investments that causes concern about interest-rate risk is declining, although there is still room for improvement," Matz commented.
Federally insured credit unions also posted positive net income in the third quarter, $2.3 billion, a decline of $82 million, or 3.5%, from the third quarter of 2014. However, on the whole, federally insured credit unions have recorded positive net income for 23 straight quarters.
On a slightly darker note, the delinquency rate at federally insured credit unions edged up in the third quarter, to 78 basis points, up from 74 basis points the previous quarter, but this figure is still well below the 85 basis-point level recorded in the third quarter of 2014.
The net charge-off ratio amounted to an annualized 46 basis points year-to-date, down from 48 basis points through the end of the third quarter of 2014.
With respect to return on average assets, federally insured credit unions posted a figure of an annualized 80 basis points at the end of the third quarter, "slightly below" the level in the third quarter of 2014. Overall, 78% of all federally insured credit unions posted positive returns on average assets for the first three quarters of 2015, versus 76% in the first three quarters of 2014.
Nearly all (98%) of federally insured credit unions were well-capitalized in the third quarter—reporting a net worth ratio at or above the statutorily required 7%. One year ago, 97.5% of credit unions were well-capitalized.
Total assets in federally insured credit unions rose to $1.18 trillion at the end of the third quarter of 2015, a jump of $72.6 billion, or 6.6%, from the end of the third quarter of 2014.
Overall, share and deposit accounts at federally insured credit unions increased by $53.3 billion from the end of the third quarter of 2014 to $992.5 billion. Rate-sensitive money market accounts climbed by $9.8 billion from the third quarter of 2014.
In terms of asset growth, the big keep getting bigger. Federally insured credit unions with more than $500 million in assets continued to dominate most performance measures in the third quarter of 2015. With $841.6 billion in combined assets, these 468 credit unions held more than seven out of every ten dollars of total system assets at the end of the quarter. Large credit unions also delivered the strongest growth in loans and membership and the highest return on average assets.
Credit unions with assets of less than $10 million (which number 1,863) also recorded positive loan and net worth growth and a higher net worth ratio than other peer groups, but their membership levels continued to fall.
NAFCU was quick to weigh in on the report. "The NCUA's third-quarter call report… indicates a deepening level of confidence among credit union members and the increasing value that members place on their credit unions," said NAFCU president and CEO Dan Berger. "This data demonstrates credit unions are a welcome resource and continue to appeal based on a member-focused, not-for-profit business model that delivers very competitive rates, low costs and fees, as well as extraordinary member service."
