ALEXANDRIA, Va. — Credit union income sources shifted from investments back to loans during Q1, according to a new report from NCUA, with loans up by nearly 11% year-over-year.

Much of the gains were driven by increases in auto lending, and while total investments were down compared to Q1 of 2014, membership, assets, deposits and net worth are on the rise, while net interest margins are holding steady.

"Credit unions are continuing to make the loans needed to grow local economies," NCUA Chairman Debbie Matz said in a statement. "As a result, their members are buying houses and cars, and they're paying for college to give young people a better start in life. At the same time, credit unions are curbing long-term investments. The switch from long-term investments to loans is decreasing interest-rate risk, a positive development for the credit union system as a whole."

Diving Into the Data

Among the highlights of NCUA's data:

  • New auto loans grew by $89.3 billion (3.4%) from the previous quarter, and were up 21.5% from Q1 2014.
  • Used auto lending rose by $147.3 billion (2.5%) from the previous quarter, and saw a lift of 13.2% year-over-year.
  • First mortgages grew by $297 billion (1.6%) from the previous quarter and 8.9% from Q1 2014. Fixed-rate loans made up nearly 60% of total first mortgage loans outstanding at the end of Q1 2015.
  • Second mortgages were down by 0.5% from the previous quarter to $71.6 billion, though rose 2.5% year-over-year.
  • MBLs were up 2.1% to $52.9 billion, a lift of 11.6% from Q1 2014.
  • Payday lending alternatives dropped by 18.2% from Q1 but grew by 29.9% year-over-year.
  • Total credit union investments dropped 3.7% year-over-year to $280.4 billion, continuing a trend as CUs move away from long-term investments. All categories saw declines except those with maturities of one to three years, which increase 20% year-over-year to $107 billion. Those with maturities of 10 years or more were down 29% from Q1 2014 to $5.3 billion.
  • Net income rose by 5.7% ($119 million) year-over-year to $2.2 billion. This marks the 21st consecutive quarter with positive net income for credit unions.
  • Net worth ratios were also up by 20 basis points year-over-year to 10.81%, though that number is a decline of 15 basis points from the end of Q4 2014, consistent with first-quarter trends. Additionally, the industry as a whole remains well-capitalized, with 97.5% reporting net worth at or above the required 7%. Less than 1% of federally insured CUs are currently undercapitalized, NCUA said.

Delinquencies Down, Membership Up

NCUA data also revealed that delinquencies and charge-offs are at their lowest levels in eight years, with delinquency rates falling from 81 basis points at the end of Q1 2014 to 69 basis points at the end of Q1 2015. Net charge-off ratios were also down by three basis points to 47BPs. Charge-offs due to bankruptcy also dropped to 16.9%, 137 basis points lower than one year ago.

Nearly a year after CUNA touted credit unions hitting the 100 million member mark, NCUA says credit unions are getting close — membership at federally insured CUs stood at 99,969,794 at the end of Q1, an increase of 2.8 million compared to the end of the first quarter of 2014.

But those gains came as the number of CUs continued to decline. Overall institutions were down by 4.4% (285 credit unions) compared to Q1 2014, to 6,206 at the end of Q1 2015. NCUA said that decline is consistent with longstanding trends throughout the financial services industry.

As in the past, the 468 CUs with assets of more than $500 million — 70% of total assets — lead most performance measures for Q1, with smaller credit unions continuing to struggle. Loans and membership growth at credit unions of less than $10 million in assets were negative in Q1.

NAFCU released a statement praising the data and saying that the trends reveal that CUs continue to excel at providing service and value to members.

"Additionally, credit unions continue to demonstrate their commitment to helping member small businesses develop and grow jobs," NAFCU president and CEO Dan Berger said. "These figures affirm that credit unions continue to provide high-quality loans and financial services to millions of American consumers."

NCUA's numbers came on the heels of statistics reported by CUNA Mutual Group showing that credit union savings has reached the trillion-dollar mark.

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