Two stories today pull data from the NCUA’s 3Q19 summary.
Credit Union Times indicates that 12-month growth is the lowest since October 2012.
Credit Union Journal discusses the decline of Federally Insured Credit Unions, from 6.5 thousand in Q314 to 5.3 thousand in Q319, as credit union membership grew 4.1 million to 119.6 million members.
First, from Credit Union Times:
- The Fed’s G-19 Consumer Credit Report showed credit unions held $64.7 billion in credit card debt on Oct. 31, up 6.8% from October 2018, and keeping their share slightly higher than a year earlier.
- The growth was slightly higher than the overall 6.5% loan growth among credit unions in October reported by CUNA Dec. 4. Banks held $944.6 billion in credit card debt Oct. 31, up 3.9% from a year earlier.
- For credit unions, 12-month growth was the lowest since October 2012’s 4.0% gain. A year ago, their credit card balances were 8.9% higher than those in October 2017.
- Credit unions’ market share was 6.2% in October, on par with September and up from 6% in October 2018. Banks’ share was 89.8% in October, up from 89.7% in September and about the same as their October 2018 share.
The Big Get Bigger.
- Navy Federal, Vienna, Va. ($106 billion in assets, 8.6 million members) had credit card loans of $18 billion, up 15.2%.
- PenFed Credit Union, Tysons, Va. ($24.4 billion, 1.8 million) had credit card loans of $1.7 billion, up 0.8%.
- BECU, Seattle, ($21.2 billion, 1.2 million) had credit card loans of $1.2 billion, up 9.3%.
- State Employees’ Credit Union, Raleigh, N.C. ($40.6 billion, 2.4 million) had credit card loans of $772.3 million, up 3.1%.
- SchoolsFirst Federal Credit Union, Santa Ana, Calif. ($16 billion, 897,015) had credit card loans of $754.1 million, up 2.9%.
- Pennsylvania State Employees’ Credit Union, Harrisburg, Pa. ($5.6 billion, 459,045) had credit card loans of $746.7 million, up 3%.
- Suncoast Credit Union, Tampa, Fla. ($10.3 billion, 844,897) had credit card loans of $728.6 million, up 12.9%.
- Digital Federal Credit Union, Marlborough, Mass. ($9 billion, 834,258) had credit card loans of $614.7 million, up 9.4%.
- America First Federal Credit Union, Riverdale, Utah ($11.2 billion, 1 million) had credit card loans of $563.4 million, up 10%.
- Randolph-Brooks Federal Credit Union, San Antonio ($9.7 billion, 843,982) had credit card loans of $521.4 million, up 15.7%.
From Credit Union Journal: The Small Get Consolidated.
- While credit union mergers have slowed somewhat this year, the number of institutions operating continues to decline, hitting 5,281 at the end of the third quarter, 155 fewer credit unions than one year prior. The number of low income-designated credit unions continues to rise, however, hitting 2,615, a 2% increase from the same time last year.
- While many states have updated their state credit union statutes in recent years to help state-chartered institutions better compete, federally chartered CUs continue to dominate the industry, making up more than 60% of all active institutions. NCUA reports 3,321 FCUs in business at the end of Q3 compared to 1,960 federally insured state-chartered shops.
But the credit union appeal is still active.
- Regardless of charter type, membership at federally insured credit unions was up by 4.1 million members year-over-year, for a total of 119.6 million members nationwide.
The NCUA Indicates Financials Are Equally Healthy.
- Total assets in federally insured credit unions rose by $98 billion, or 6.8%, over the year ending in the third quarter of 2019, to $1.54 trillion.
- Total loans outstanding increased $61 billion, or 5.9%, over the year to $1.1 trillion. The average outstanding loan balance in the third quarter of 2019 was $15,530, up to $262, or 1.7%, from one year earlier.
- The delinquency rate at federally insured credit unions was 67 basis points in the third quarter of 2019, unchanged from one year earlier. The net charge-off ratio was 55 basis points, down slightly from 57 basis points in the third quarter of 2018.
- The net interest margin for federally insured credit unions was $47.7 billion in the third quarter of 2019, or 3.2% of average assets. That compares with $44.0 billion, or 3.1% of average assets, in the third quarter of 2018.
- The return on average assets for federally insured credit unions was 98 basis points over the year ending in the third quarter of 2019, up from 96 basis points in the third quarter of 2018. The median return on average assets across all federally insured credit unions was 65 basis points, up 5 basis points from the third quarter of 2018.
- The number of federally insured credit unions declined to 5,281 in the third quarter of 2019, from 5,436 in the third quarter of 2018. In the third quarter of 2019, there were 3,321 federal credit unions and 1,960 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends.
Mercator Advisory Group sized the market in 2016 with this report. We anticipated a continued decline in the absolute number of credit unions and the consistent growth trend. Something that stood out in the credit union market is that despite the fact that credit cards are one of the highest yielding loan classifications, credit unions only allocated 6% of their total assets to the market, which indicates that the sector has plenty of growth potential. With the number of active Credit Union Service Organizations (CUSO) and the number of reliable platform service providers, such as Fiserv and TSYS, the channel has strong growth potential.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group