ALEXANDRIA, Va. (12/3/13)--Federally insured credit unions are on the right course with loans, membership and net worth all increasing during the third quarter of 2013, National Credit Union Administration Chairman Debbie Matz said Monday, as the agency released its most recent trend data.
The total number of loans held by credit unions increased by 2.9% in the third quarter, continuing a trend that began in 2011. In total, credit unions held $631.5 billion in loans at the end of the quarter.
The Credit Union National Association's monthly numbers, released on Monday, showed similarly positive results. (See News Now
story: CUNA Monthly Estimates Show Loan, Savings Increases.)
"The strong loan growth, at a 11.6% annual rate in the third quarter, is really good news for credit unions, and for the economy. Loans are credit unions' best asset, and the return to consumer loan growth over the past year will strengthen credit union balance sheets, CUNA Chief Economist Bill Hampel said.
The agency reported:
New auto loans grew by 4%, to total $69 billion;
Used auto loans grew by 3.1%, to total $125 billion;
First mortgage loans grew by 3.3%, to total $262.3 billion;
Net member business loan balances grew by 2.5%, to total $44.6 billion; and
Non-federally guaranteed student loans grew by 10.2%, to total $2.5 billion.
Credit union membership also increased by 726,911 during the quarter, bringing the national total to 95.9 million, a new record.
The credit union system's net worth ratio was 10.65% at the end of the third quarter, a 15 basis point increase from the 2nd quarter total. This is the highest net worth ratio reported since late 2008.
"The good news is we continue to see strong, positive trends in the industry. Credit unions are serving their members and investing in their communities by making the loans needed to purchase homes, buy cars and go to college. That said, smaller credit unions still face challenges in growing loan volume, generating earnings and attracting members, so NCUA must continue to provide them with needed assistance, training and support," Matz said.
Matz also warned that credit unions should take interest rate risk seriously, particularly in rate-sensitive deposits, fixed-rate mortgages and certain investments.
"As interest rates go up, credit unions could be caught between a rock and a hard place," Matz said. "They have been paring expenses and reducing loan loss reserves to maintain earnings. However, as they make new loans at lower interest rates than older loans coming off their books, they have been making longer-term investments to increase yield. If credit unions haven't planned carefully, the value of those investments could decline when rates rise."
The NCUA quarterly statistics are based on call report data submitted to and compiled by the agency for the quarter ending Sept. 30.