PLANO, Texas-Even with last year's modest 1.2% loan growth rate pushing the loans-to-assets ratio down to 59.4%, credit unions were able to generate a 40% increase in net income over 2010, according to analysis by Brian Turner, director and chief strategist with Catalyst Strategic Solutions.
That performance contributed to a 7.7% gain in aggregate net worth increasing equity ratio to 10.2%, slightly higher than the 10.0% level in 2010. With total assets growing at a 5.2% pace and an average return on assets of 0.67%, the industry's return on average capital increased from 5.1% in 2010 to 6.7% last year, Turner said.
In terms of growth and return, there was a clear distinction between credit unions with greater than /smaller than $100 million in total assets, noted Turner. Although capital formation for the smaller credit unions exceeded those that were larger, due to lower loans-to-asset ratios, higher allocation of consumer loans and higher marginal net operating costs, net earnings were two-thirds lower for credit unions with less than $100 million in total assets than those greater. By the end of the year, credit unions with total assets greater than $500 million accounted for 5.5% of the total number of credit unions but controlled 64.1% of total assets.
The earnings report also shows that smaller credit unions' net interest margins were about 27 basis points higher than larger credit unions. This differential was offset by a 79-basis-point gap in net operating expense between the two, Turner said.
