The latest credit union data paints a less-than-rosy picture for the industry at large.

The National Credit Union Administration Thursday released its comprehensive industry data for the second quarter of 2024, and it will likely have some executives wringing their hands.

“Notably, an increasing segment of credit union membership continues to experience financial strain as evidenced by a steady increase in the loan delinquency rate, charge offs, and borrowing using the NCUA’s payday alternative loan product,” said NCUA Chairman Todd Harper in the release.

The delinquency rate at federally insured credit unions was 84 basis points in the second quarter of 2024, up 21 basis points compared with the second quarter of 2023.

At the same time, the net charge-off ratio increased to 0.79% in Q2, up 26 basis points from Q2 2023.

This substantial rise in loan losses is impacting some credit unions’ profitability and capital positions.

Net income for federally insured credit unions in the first half of 2024 totaled $15.7 billion at an annual rate, down $1.8 billion, or 10% from the first half of 2023.

Of course all the news was not bad.

Total loans outstanding increased $56.1 billion, or nearly 4% over the year to $1.62 trillion while interest income rose $19.9 billion, or 22% over the year to $112.3 billion annualized.

And deposits – other than regular shares – increased by $105.8 billion, or 12%, to $985.7 billion, led by share certificate accounts, which grew $123.8 billion, or 31%, over the year to $528.2 billion.

“The credit union system overall remains largely stable in its performance and is relatively resilient against potential economic disruptions,” Harper said. “However, challenges persist across the system and at specific institutions. While interest rate and liquidity risks have ebbed recently, we are seeing growing signs of concern in loan performance, capital, and earnings as deposit levels have dropped.”

As of June 30, there were 4,533 federally insured credit unions, down from 4,686 in the second quarter of 2023.

In the second quarter of 2024, U.S. credit unions had 141 million members after they added 3.3 million members over the year.

But much of that membership growth continues to come at the top end of the asset spectrum.

While membership rose 4.5% for credit unions with at least $10 billion of assets, institutions between $500 million and $1 billion of assets saw membership decline by 7.5%.

“An increasing segment of credit union membership continues to experience financial strain as evidenced by a steady increase in the loan delinquency rate, charge offs, and borrowing using the NCUA’s payday alternative loan product.”

 – Todd Harpe
Chair
NCUA