NCUA 2nd Quarter Report: Number of CUs Drops, but Membership Increases
Agency says credit union industry is “generally well positioned,” but does issue warning.
The number of federally insured credit unions fell once again during the second quarter of 2023, but membership continued to climb, NCUA Chairman Todd Harper said Thursday.
Those credit unions added 5.1 million members since the second quarter of 2022, while the number of credit unions fell from 4,853 to 4,686 across the same time span.
However, in releasing the second quarter credit union performance data, Harper noted that the number of federally insured credit unions only decreased by 26 during the second quarter—the smallest quarterly drop since the fourth quarter of 2005.
The drop in the number of credit unions follows a long-standing trend.
Reaction to the Report and a Warning
“The latest quarterly data indicate the credit union system is—overall—generally well positioned,” Harper said, during a telephone press briefing with reporters.
However, he added that the report did reveal some troubling signs—namely loan delinquencies and charge offs.
The delinquency rate at federally insured credit unions was 63 basis points in the second quarter of 2023, up 15 points—or 31 percent—compared with the second quarter of 2022.
The report also showed that the credit card delinquency rate rose to 154 basis points from 107 points one year earlier.
And the auto loan delinquency rate increased 22 basis points over the year to reach 67 basis points in the second quarter.
Additionally, it was found that the net charge-off ratio for federally insured credit unions was 53 basis points in the second quarter of 2023, up 24 points compared with the second quarter of 2022.
Harper warned that with federal student loan payments scheduled to resume, households with tight budgets might be even more distressed.
Harper noted that the second quarter report includes, for the first time, separate performance measurements for MDIs.
Those findings showed that while the total assets of MDIs average about $133 million, their return on average assets was as strong as credit unions with more than $1 billion.
In addition, he said, the delinquency rate at MDIs was 53 basis points—5 points lower than the delinquency rate of credit unions holding more than $1 billion in assets.
The NCUA also reported that:
–Net income for federally insured credit unions in the first half of 2023 totaled $17.4 billion at an annual rate, down $0.4 billion—or 2.1 percent—from the first half of 2022.
–The number of credit unions with a low-income designation declined by 35 over the past year, falling to 2,585 in the second quarter of 2023.
–The number of credit unions with total assets over $500 million rose to 708, an increase of five compared with 2022.
–The number of federally insured credit unions with between $100 million and $500 million in assets declined to 1,060 in the second quarter of 2023, down from 1,083 in the second quarter of 2022.
–Credit unions with assets between $50 and $100 million declined to 653 in the second quarter of 2023, down from 684 one year earlier.
–The number of federally insured credit unions with assets of between $10 million and $50 million declined to 1,320 in the second quarter of 2023, down from 1,393 in the second quarter of the previous year.
–The number of federally insured credit unions with less than $10 million in assets declined to 945 in the second quarter of 2023, down from 990 in the second quarter of 2022.
–Loans secured by one-to-four- family residential properties increased by $74.8 billion—or 12.3 percent—to reach $684.9 billion in the second quarter of the year.