CU Delinquency Rates Fall in June, ROA Up In First Half

Credit unions saw improvements in their delinquency rates and  return on assets (ROA) in June, according to a Credit Union National Association (CUNA) economist's  analysis  of  CUNA's Monthly Credit Union Estimates.
 

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"Credit unions reported another significant drop in their loan delinquency rates in June as consumers repaired their balance sheets," Steve Rick, CUNA senior economist, told News Now about credit union asset quality.

"Delinquency rates [60-day-plus] fell to 1.32% in June from 1.38% in May. The delinquent-loan- to total-loan ratio stood at 1.6% in December. The significant drop in the ratio over the past six months was caused by the dollar amount of delinquent loans falling 16.5%, while total loans rose 1.4%," he said.
 
"We expect delinquency rates to fall below 1.2% by year end as the unemployment rate continues to fall," Rick added.
 
Credit union loans outstanding grew 0.4% in June, compared with 0.5% growth during May. Unsecured personal loans led loan growth with a 1.8% increase, followed by home equity loans (1.6%) and fixed-rate mortgages (1.4%). Used-auto loans rose 0.9%; new-auto loans, 0.8%; and credit card loans, 0.5%. Adjustable-rate mortgages decreased 0.7%. Credit union loans totaled $595.3 billion, compared with $577.8 billion in June 2011.
 

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Credit union savings balances rose 0.8%, compared with a 0.2% gain in May. Share drafts led savings growth with a 3.7% increase, followed by individual retirement accounts and regular shares, which each rose 1%. Money market accounts grew 0.5%, and one-year certificates declined 0.5%. Credit union savings totaled $888.1 billion--or $58.3 billion more than the $829.8 billion in June 2011.
 
Credit unions' loan-to-savings ratio remained at 67%. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 10%.
 
The movement's overall capital-to-asset ratio is 10%. The total dollar amount of capital is $104 billion.
 
"For the first half of 2012, credit unions reported 74 basis points of return on assets, slightly above the 68 basis points reported for all of 2011," Rick said. "Most of the rise in earnings was due to falling loan loss provisions because of falling loan charge-offs and the aforementioned falling loan-delinquency rates. We expect earnings to reach 80 basis points of average assets for all of 2012 and 90 basis points next year."