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NCUA: CU Lending Accelerates in Second Quarter
Wednesday, September 3, 2014 6:45 AM

An improving economy in the second quarter of 2014 resulted in the highest year-over-year loan growth since 2006 for federally insured credit unions as lending increased in all categories, the National Credit Union Administration reported yesterday.

 “A stronger economy and a stronger credit union system go hand-in-hand,” NCUA Board Chairman Debbie Matz said. “Credit unions continue to make the loans that help people buy cars and homes, pay college tuition and start or expand small businesses. However, the slight decrease in long-term investments as a share of assets over the past quarter is not enough to alleviate interest-rate risk. Long-term fixed-rate assets remain elevated, and interest-rate risk continues to be a key concern and a supervisory priority for NCUA.”

The industry’s net long-term asset ratio remained high—35.4 percent—so interest-rate risk remains a serious threat.

NCUA released the new figures based on Call Report data submitted to and compiled by the agency for the quarter ending June 30, 2014. In the second quarter of 2014, outstanding loan balances rose 9.8 percent from the second quarter of 2013 to $673.9 billion, the highest year-over-year growth rate since the first quarter of 2006. Year-over-year:

  • New auto loans grew 17 percent to $77.7 billion.
  • Used auto loans increased 11.6 percent to $135.3 billion.
  • Net member business loan balances rose 12 percent to $48.8 billion.
  • Non-federally guaranteed student loans increased 26 percent to $2.9 billion.
  • Short-term small loan originations, a consumer-friendly alternative to predatory payday loans, totaled $106 million at an annualized rate in the first half of 2014, up 27.5 percent from the first half of 2013. 

First mortgage real estate loans reached $279.2 billion, up 9.9 percent from the second quarter of 2013. Sixty-one percent of first mortgage loans outstanding had fixed rates.

The growth in total loans over the year contributed to a 4.2 percentage-point increase in the overall loan-to-share ratio, which reached 71.7 percent, the highest ratio since the fourth quarter of 2010.

Membership in federally insured credit unions grew by 909,452 in the second quarter of 2014, reaching a new high of 98 million.

The number of federally insured credit unions fell to 6,429 at the end of the second quarter, 252 fewer than at the end of the second quarter of 2013, a decline of 3.8 percent. The decline is consistent with recent consolidation trends within the credit union system.

Federally insured credit unions’ return on average assets ratio rose to an annualized 81 basis points through the end of the second quarter, a slight increase from the first quarter and 3 basis points below the second quarter of 2013. Net income in the quarter ending June 30 was $2.3 billion, up 2.9 percent from a year earlier.

Additional information is available on NCUA’s website.