Overall credit union performance during the first quarter of 2018 was strong, according to data released Wednesday by the National Credit Union Administration, including the continuing trend of increasing assets and loans outstanding – but there also was the continuation of a long-term trend: the number of federally insured credit unions declined yet again

The agency noted it made changes to the quarterly data report to reflect changes in the information collected from credit unions as a result of the regulator’s modernization of its member-business lending rule in 2016.

The NCUA data confirmed another trend Credit Union Journal has been tracking for several years now: the so-called “Great Divide,” in which large CUs see the lion’s share of the growth while smaller credit unions continue to struggle. CUs with less than $50 million in assets reported declines in loans, membership and net worth during Q1, according to NCUA data.

NCUA highlighted several selected performance indicators, including:

  • Total assets in federally insured credit unions rose by $79 billion, or 5.9 percent, over the year ending in the first quarter of 2018, to $1.42 trillion.
  • Total loans outstanding increased $87 billion, or 9.9 percent, over the year to $971.9 billion. The average outstanding loan balance in the first quarter of 2018 was $15,039, up $541, or 3.7 percent, from one year earlier.
  • The delinquency rate at federally insured credit unions was 66 basis points in the first quarter of 2018, down slightly from one year earlier. The net charge-off ratio was 60 basis points, up from 58 basis points in the first quarter of 2017.
  • Insured shares and deposits rose $58 billion, or 5.5 percent, over the four quarters ending March 2018, to $1.13 trillion.
  • The loan-to-share ratio stood at 80.8 percent in the first quarter of 2018, up from 77.7 percent in the first quarter of 2017.
  • The credit union system’s net worth ratio was 10.88 percent in the first quarter of 2018, compared with 10.69 percent one year earlier.
  • Net income totaled $12.6 billion at an annual rate in the first quarter of 2018, up $3.3 billion, or 35.4 percent, from the same period a year ago.
  • The net interest margin for federally insured credit unions was $42.3 billion in the first quarter of 2018, or 3.0 percent of average assets, compared to $38.0 billion, or 2.9 percent of average assets, in the first quarter of 2017.
  • The return on average assets for federally insured credit unions was 90 basis points over the year ending in the first quarter of 2018, up from 71 basis points in the first quarter of 2017. The median return on average assets across all federally insured credit unions was 48 basis points, up 15 basis points from the first quarter of 2017.
  • The number of federally insured credit unions declined to 5,530 in the first quarter of 2018 from 5,737 in the first quarter of 2017. In the first quarter of 2018, there were 3,477 federal credit unions and 2,053 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends.
  • The number of credit unions with a low-income designation rose to 2,544 in the first quarter of 2018 from 2,518 one year earlier.
  • Federally insured credit unions added 4.7 million members over the year, and credit union membership in these institutions reached 112.7 million in the first quarter of 2018.

Balance Sheet Details

The regulator highlighted a number of elements from credit union balance sheets:

  • Total assets in federally insured credit unions rose by $79 billion, or 5.9 percent, over the year to $1.42 trillion in the first quarter of 2018.
  • Cash and equivalents (assets with maturity of three months or less) rose $0.5 billion, or 0.4 percent, to $121.6 billion.
  • Total investments (instruments with maturities in excess of three months) fell $12.8 billion, or 4.6 percent, to $262.6 billion.
  • Total loans outstanding increased $87.3 billion, or 9.9 percent, over the year to $971.9 billion. Credit union loan balances rose over the year in every major category, compared with the first quarter of 2017.
  • Loans secured by 1-4 family residential properties totaled $418.4 billion in the first quarter of 2018; data are unavailable prior to 2017Q3.
  • Auto loans increased $33.4 billion, or 10.9 percent, to $340.2 billion.
  • Used auto loans rose $18.8 billion, or 10.0 percent, to $205.6 billion.
  • New auto loans rose $14.6 billion, or 12.2 percent, to $134.6 billion.
  • Credit card balances rose $5.1 billion, or 10.0 percent, to $56.7 billion
  • Non-federally guaranteed student loans rose $0.6 billion, or 13.9 percent, to $4.6 billion.
  • Commercial loans, excluding unfunded commitments, totaled $65.4 billion in the first quarter of 2018; data are unavailable prior to 2017Q3. Commercial loans are not directly comparable to member business loans.
  • The delinquency rate at federally insured credit unions was 66 basis points in the first quarter of 2018, down from 69 basis points one year earlier. Loan performance improved in most categories:
  • The delinquency rate on fixed real estate loans was 35 basis points in the first quarter, down from 38 basis points one year earlier.
  • The credit card delinquency rate was 124 basis points, up from 109 basis points in the first quarter of 2017
  • For auto loans, the delinquency rate was 55 basis points in the first quarter of 2018 compared with 57 basis points one year earlier.
  • The delinquency rate for commercial loans, excluding unfunded commitments, was 145 basis points in the first quarter of 2018; data for quarters prior to 2017Q3 are not available.
  • The net charge-off ratio for all federally insured credit unions was 60 basis points in the first quarter of 2018, up from 58 basis points in the first quarter of 2017.

The numbers relating to deposits and net worth likewise showed overall strength:

  • Credit union shares and deposits rose by $65.5 billion, or 5.8 percent, over the year to $1.20 trillion in the first quarter of 2018. Regular shares rose $28.5 billion, or 6.8 percent, to $445.0 billion. Other deposits increased $22.4 billion, or 4.0 percent, to $577.9 billion, led by share certificate accounts, which were up $13.7 billion, or 6.8 percent, and money market accounts, which rose $7.6 billion, or 3.0 percent.
  • The credit union system’s net worth increased by $11.1 billion, or 7.8 percent, over the year to $154.2 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.88 percent in the first quarter of 2018, up from 10.69 percent one year earlier.
  • Net income for federally insured credit unions in the first quarter of 2018 totaled $12.6 billion at an annual rate, up $3.3 billion, or 35.4 percent, from the first quarter of 2017.
  • Interest income rose $5.9 billion, or 13.2 percent, over the year to $50.7 billion, and non-interest income increased $3.1 billion, or 18.2 percent, to $20.0 billion. The increase in non-interest income partly reflected the recognition of the Share Insurance Fund equity distribution scheduled to be paid later this year.
  • Interest expense totaled $8.4 billion annualized in the first quarter of 2018, up $1.6 billion, or 23.3 percent, from one year earlier. Non-interest expenses grew $3.1 billion, or 7.7 percent, over the year to $43.0 billion in the first quarter. Rising labor expenses, which were up $1.5 billion, or 7.2 percent, accounted for half of the increase in non-interest expenses.
  • The aggregate net interest margin widened $4.3 billion over the year, or 11.3 percent, to $42.3 billion at an annual rate in the first quarter of 2018.
  • The credit union system’s provision for loan and lease losses rose $1.0 billion over the year, or 17.8 percent, to $6.7 billion at an annual rate in the first quarter of 2018.

Performance by asset category

NCUA said performance by asset category was consistent with long-running trends: Credit unions with assets of at least $1 billion reported the strongest growth in loans, membership and net worth over the year ending in the first quarter of 2018, while CUs with less than $100 million in assets reported declines in loans, membership and net worth over the year.

  • The number of federally insured credit unions with assets of at least $1 billion increased to 294 in the first quarter of 2018 from 278 in the first quarter of 2017. These 294 credit unions held $906.6 billion in assets, or 64 percent of total system assets. Credit unions in this category reported loan growth of 13.5 percent. Membership rose 9.1 percent. Net worth increased 11.5 percent.
  • The number of federally insured credit unions with assets of at least $500 million but less than $1 billion increased to 245 in the first quarter of 2018 from 239 in the first quarter of 2017. These 245 credit unions held $174.9 billion in total assets, or 12 percent of total system assets. Credit unions in this category reported loan growth of 5.9 percent. Membership increased 3.2 percent. Net worth increased 4.3 percent.
  • The number of federally insured credit unions with at least $100 million but less than $500 million in assets declined to 1,040 in the first quarter of 2018 from 1,053 in the first quarter of 2017. These 1,040 credit unions held $233.9 billion in total assets, or 17 percent of total system assets. Credit unions in this category reported loan growth of 2.9 percent. Membership declined 1.8 percent. Net worth increased 1.9 percent.
  • The number of federally insured credit unions with at least $50 million but less than $100 million in assets fell to 704 in the first quarter of 2018 from 731 in the first quarter of 2017. These 704 credit unions held $50.5 billion in total assets, or 4 percent of total system assets. Credit unions in this category reported a 0.3 percent decline in total loans. Membership declined 4.9 percent. Net worth decreased 0.9 percent.
  • The number of federally insured credit unions with assets of at least $10 million but less than $50 million declined to 1,761 in the first quarter of 2018 from 1,828 in the first quarter of 2017. These credit unions held $44.2 billion in assets, or 3 percent of total system assets. Credit unions in this category reported a 0.1 percent decline in loans. Membership declined 5.0 percent. Net worth declined 1.1 percent.
  • The number of federally insured credit unions with less than $10 million in assets declined to 1,486 in the first quarter of 2018 from 1,608 in the first quarter of 2017. These credit unions held $6.2 billion in assets, or less than 1.0 percent of total system assets. Credit unions in this category reported a 6.0 percent decline in loans. Membership fell 9.5 percent. Net worth declined 5.9 percent.