Credit Unions See Continued Share and Deposit Growth in Third Quarter

While data appears strong, Chairman Harper warns credit unions to brace for potential challenges ahead like inflation and interest rate risk.

bredehoft headshot 280x210According to the latest financial performance data released recently by the National Credit Union Administration, federally insured credit unions saw shares and deposits increase by $219.9 billion, or 14.4 percent, to $1.75 trillion over the year ending in the third quarter of 2021. Regular shares increased $95.8 billion, or 17.6 percent, to $640.0 billion. Total assets in federally insured credit unions rose by $231 billion, or 12.9 percent, to $2.02 trillion in the third quarter of 2021.

“Federally insured credit unions, as a whole, continued to perform well in the third quarter,” said NCUA Chairman Todd M. Harper. “Lending has increased 5.8 percent compared to this point a year ago, and delinquency and charge-off rates are down. And, nearly five million new members have joined a federally insured credit union in the last 12 months. That is all good news.”

“There is, however, wisdom in the age-old advice: If you fail to plan, you plan to fail,” Harper added. “While the third quarter data appear strong, federally insured credit unions should brace for potential challenges ahead like inflation and interest rate risk. They should also prepare for increases in credit risks now that many pandemic-relief programs have ended.”

Highlights from the NCUA’s Quarterly Data Summary Report(opens new window) for the third quarter of 2021 include:

• The credit union system’s net worth increased by $20.0 billion, or 10.7 percent, over the year to $206.6 billion. The aggregate net worth ratio — net worth as a percentage of assets — stood at 10.23 percent in the third quarter of 2021, down from 10.44 percent one year earlier.
• The return on average assets for federally insured credit unions was 112 basis points in the third quarter of 2021, up from 65 basis points in the third quarter of 2020. The median return on average assets across all federally insured credit unions was 56 basis points, up 14 basis points from the third quarter of 2020.
• Total loans outstanding increased $67.1 billion, or 5.8 percent, over the year, to $1.22 trillion. Credit union loan balances rose in most major categories, compared with the third quarter of 2020.
• The delinquency rate at federally insured credit unions was 46 basis points in the third quarter of 2021, down 8 basis points from one year earlier. The net charge-off ratio was 26 basis points, down from 48 basis points in the third quarter of 2020.
• The number of federally insured credit unions declined to 4,990 in the third quarter of 2021, from 5,133 in the third quarter of 2020. In the third quarter of 2021, there were 3,122 federal credit unions and 1,868 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends.
• Federally insured credit unions added 4.9 million members over the year, and credit union membership in these institutions reached 128.6 million in the third quarter of 2021.

The NCUA makes credit union system performance data available in the Credit Union Analysis section of NCUA.gov.