Assets Surpass $2T, ROA Skyrockets, & 5M Members Added

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Second-quarter 2021 U.S. credit union trends continued displaying an evolving world as the industry served its members going from spring into summer and posted its highest return on assets (ROA) in over 20 years.

Assets nationwide surpassed $2 trillion, riding on the back of double-digit annualized growth and a record 5.1 million members added over the past 12 months. More than $440 billion in member savings has been deposited in credit unions over the past two years.

Loan volume also grew more than 20 percent for the second consecutive year, and outstanding total loans hit a new record. The industry’s loan-to-deposit ratio increased quarter-over-quarter for the first time since third-quarter 2019.

This picture was presented by Callahan & Associates during the firm’s recent Second Quarter Trendwatch Webinar (view entire slide presentation or watch the entire webinar). From June 30, 2020 – June 30, 2021 (year-over-year unless otherwise noted), U.S. credit unions experienced the following trends:

Loan Trends
Lending activity continued at a record pace, granting the most credit ever to members in the second quarter. Consumer lending is picking up as the economy reopens, while mortgage lending remains strong. Asset quality also improved across the board to near-record levels as members continued to appropriately manage debt.

  • Consumer loan origination growth is outpacing first-mortgage origination growth through the first six months of 2021.
  • In the biggest lending quarter ever, all loan products reported quarterly origination increases.
  • Despite record originations, market share in auto and mortgage lending is declining.
  • Balances are rising in every loan product in the second quarter as dynamics change from the first quarter.
  • Auto lending continues to rebound from mid-pandemic lows. Third-party sources are a key driver of vehicle loan recovery.
  • Loan participation purchases have risen significantly over the past year.
  • Asset quality continues to improve, with delinquencies and net charge-offs combined reaching the lowest level in more than 20 years.
  • Delinquency is improving across the board.

Deposit (Share) Trends
Deposit balances rose in the second quarter at the slowest pace since 2019. Core deposits are driving the increase in savings. Also, the average member balance hit a record high.

  • Second quarter share growth is the slowest since the third quarter of 2019.
  • Checking, money market and savings account balances continued to grow at a double-digit pace.
  • Checking accounts and member usage both hit record highs.
  • The average member relationship grew $1,130 year-over-year, driven by unprecedented deposit inflows.

Earnings and Capital
The highest return on assets (ROA) in over 20 years was posted. Revenue rose versus the first half in the prior year, driven by non-interest income. The average net worth ratio also rose slightly in second quarter as balance sheets grew.

  • Revenue rose 1.8 percent despite a continued slowdown in interest-income streams.
  • Interchange income picked up substantially in the first half of 2021 as economies reopened.
  • Loan yield and cost-of-funds are trending down at a similar pace.
  • The gap between the net interest margin (NIM) and operating expense ratio (OpEx) is expanding.
  • Investment in full-time staff is ramping up as the industry grows.
  • For the first time on record, there was a negative quarterly loan provision expense.
  • There is $2.19 reserved for every $1 in delinquent loans.
  • At 1.11 percent, return on assets (ROA) is at the highest level in over 20 years. 20 percent of credit unions posted an ROA of 1 percent or higher, and 54 percent of credit union assets post an ROA of 1 percent or greater.
  • Asset growth continued to outpace net-worth growth.
  • The net worth ratio has declined for the past two years but remains well above the National Credit Union Administration’s (NCUA) 7 percent threshold.
  • More than 94 percent of credit unions remain “well capitalized.” And about 98.5 percent of industry assets are “well capitalized.”

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