Northwest Credit Unions Post Stronger Loan Growth than Banks in Q3

Northwest credit unions recorded greater asset growth, greater loan growth and a slightly higher ROAA than the region’s banks in the third quarter of 2013, an analysis by the Northwest Credit Union Association shows.

Overall assets grew at both banks and credit unions, fueled by quarterly increases in loans and deposits. Assets at credit unions grew by 1.4 percent in the third quarter, according to Dan Hein, the Association’s vice president of finance, who analyzed quarterly Bank Insight data from Thomson Reuters. Bank assets increased by 1.0 percent, Hein says.

At the end of the third quarter, Northwest credit unions represented $52.4 billion in assets, Hein says. Banks reported $87 billion in assets.

“The positive trends continue,” Hein says. “Northwest credit unions continued to post strong growth in the third quarter.”

Hein’s analysis shows:

  • Loans grew by 2.48 percent at Northwest credit unions in the third quarter, compared to 0.95 percent at the region’s banks. Credit unions saw growth in auto loans and first-mortgage real estate loans and a decrease in other real estate loans. Loan growth at banks came more from multifamily residential real estate loans, as well as non-farm and non-residential real estate loans.
  • Deposits grew more quickly at banks than at credit unions in the third quarter. Banks deposits grew by 1.86 percent, while deposits at credit unions grew by 1.16 percent. Banks primarily saw growth in checking and money market accounts, Hein says, and a decrease in certificates. Credit unions saw growth primarily in savings, money market and checking deposits, with a decrease in certificates.

    In terms of their overall portfolios, Northwest banks primarily held deposits in money market (35 percent) and certificate accounts (28 percent) in the third quarter, while credit unions held more deposits in savings (43 percent) and money market (26 percent) accounts.

    Because banks held more of their deposits in higher-yielding accounts, Hein says you’d expect their cost of average deposits to be higher than that of credit unions. But that’s not the case: The cost of average deposits at credit unions was 46 basis points in the third quarter, compared to 38 basis points at banks.

  • ROAA for Northwest credit unions through three quarters of 2103 has been strong, with a combined ROAA above 100 basis points. Northwest banks posted a strong ROAA as well — right at 100 basis points. But that’s not as high as in 2012, Hein says, when quarterly ROAA at banks approached 150 basis points each quarter.
  • Delinquent loans continue to decline for both Northwest credit unions and banks. However, credit union ratios remain well below that of banks. Credit unions reported a delinquency ratio of 68 basis points in the third quarter, compared to 158 basis points at banks. However, banks were not as aggressive as credit unions in terms of net charge-offs. Banks reported a net charge-off ratio of 21 basis points, compared to 62 basis points at credit unions.

 

Questions? Contact Gary Stein: 503.350.2216, gstein@nwcua.org.

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