NCUA Unveils Second Quarter Credit Union System Performance Report
Positive Growth and Cautious Optimism
In its latest financial performance report, the National Credit Union Administration (NCUA) revealed significant growth in the credit union sector during the second quarter of 2023. Total assets in federally insured credit unions saw an impressive increase of $82 billion, marking a substantial 3.8 percent rise over the previous year, reaching a total of $2.22 trillion.
This boost in assets was paralleled by a robust increase in total loans outstanding, which soared by $175 billion, or 12.6 percent, reaching $1.56 trillion. Additionally, insured shares and deposits grew by $31 billion, accounting for a 1.8 percent rise, summing up to $1.72 trillion from the same period a year earlier.
While these statistics paint a promising picture of the credit union landscape, NCUA Chairman Todd M. Harper exercised cautious optimism. He noted, “The latest quarterly data indicate the credit union system is — overall — generally well positioned. The increase in credit union membership, assets, loans outstanding, and insured shares and deposits give us reason for cautious optimism; cautious because the second quarter data highlight a few areas of concern.”
Delving into the Data
The NCUA’s Quarterly Credit Union Data Summary provides a comprehensive overview of the financial performance of federally insured credit unions based on information reported to the agency in the second quarter of 2023. As of June 30, 2023, there were 4,686 federally insured credit unions serving a total of 137.7 million members.
Financial Highlights from the Second Quarter of 2023
- Net income for federally insured credit unions in the first half of 2023 totaled $17.4 billion at an annual rate, showing a slight decrease of $0.4 billion, or 2.1 percent, from the first half of 2022.
- Interest income experienced a significant upswing, rising by $28.8 billion, a remarkable 45.3 percent, to reach $92.3 billion at an annual rate in the first half of 2023. Non-interest income also grew by $1.2 billion, a 4.9 percent increase, reaching $24.5 billion annualized, primarily due to other non-interest income.
- The credit union system’s provision for loan and lease losses or credit loss expenses observed substantial growth, increasing by $5.8 billion, a significant 169.5 percent rise, to $9.2 billion at an annual rate in the first half of 2023.
Challenges on the Horizon
Despite the overall positive trajectory, the second quarter data unveiled some areas of concern. Notably, delinquency rates and charge-offs witnessed an uptick. The delinquency rate at federally insured credit unions stood at 63 basis points in the second quarter of 2023, reflecting a 15 basis point increase, equivalent to a 31 percent rise compared to the second quarter of 2022.
Notably, the credit card delinquency rate surged to 154 basis points from 107 basis points a year earlier. Moreover, the auto loan delinquency rate experienced a 22 basis point increase year-over-year, reaching 67 basis points in the second quarter. The net charge-off ratio for all federally insured credit unions was 53 basis points in the second quarter of 2023, marking a 24 basis point increase when compared to the second quarter of 2022.
Shares and Deposits
Total shares and deposits at federally insured credit unions grew by $23.0 billion, a 1.2 percent increase, over the year to reach $1.88 trillion in the second quarter of 2023. However, regular shares experienced a decline of $75.1 billion, or 10.9 percent, totaling $614.1 billion. In contrast, other deposits surged by $97.5 billion, a substantial 12.5 percent increase, summing up to $879.9 billion. This growth was predominantly led by share certificate accounts, which expanded by $164.5 billion, a remarkable 68.6 percent increase, over the year to reach $404.5 billion.
Strengthened Net Worth
The credit union system’s net worth recorded a healthy increase of $13.2 billion, marking a 5.9 percent rise over the year to reach $235.9 billion. The aggregate net worth ratio, representing net worth as a percentage of assets, stood at 10.63 percent in the second quarter of 2023, a slight increase from the 10.42 percent reported one year earlier. Worth noting is that starting in the first quarter of 2023, this ratio excludes the CECL transition provision.
Accessing the Data
The NCUA has made credit union system performance data accessible through the Credit Union Analysis section on NCUA.gov. This section includes quarterly data summaries, detailed financial information, a graphics package illustrating financial trends in federally insured credit unions, and a spreadsheet listing all federally insured credit unions as of June 30, 2023, along with key metrics.