8 takeaways from NCUA's 4Q state-level data

March 18, 2021 5:00 AM

New data from the National Credit Union Administration continues to provide a wider window into the industry’s 2020 performance.

The agency’s latest Quarterly Map Review, released last week, examines several key industry metrics at the median on both the national and state level. The data shows a continuation of many trends seen earlier the year, including surging deposits, decreased lending and slow membership growth.

As in previous reports, many states that perform well – such as Idaho and Alaska – show up near the top of several different metrics, with similar commonalities at the lower end of the list.

Read on for more information. For a look at fourth-quarter trends at a national level, click here.

Membership growth slows

Membership growth slowed during 2020 as lending needs declined, unemployment rose and many workers did their jobs from home, slowing onboarding at SEG-based credit unions with facilities located onsite at the employers they serve. At the median, membership was down 0.5% in 2020, compared with a flat growth rate in 2020. NCUA said 56% of all federally insured credit unions had fewer members at the end of 2020 than they did the year before, with those on the lower end of the asset spectrum faring worse than others. Sixty-five percent of those credit unions losing member have assets under $50 million.

Alaska and Idaho saw the strongest membership growth, at 3.7% and 2.3%, respectively. Thirty-one states, however, saw declines at the median, with membership falling the most in New Jersey (-2.3%) and Massachusetts (-1.4%).

Lending contracts

At the median, lending was down 0.9% year-over-year, compared with a median growth rate of 3.1% at the close of 2019.

As with membership, Alaska and Idaho saw the strongest growth, at 7.2% and 7%, respectively.

More than two dozen states had negative median loan growth rates, with New Jersey (-8.1%) and Delaware (-6.2%) at the bottom of the pile.

Big increase in deposit growth

Government stimulus payments, expanded unemployment benefits and reduced consumer spending in 2020 resulted in a flood of deposit activity at credit union. At the median, share and deposit growth for the year was 15.9%, compared with growth of 2.6% in 2019.

Oregon saw the highest levels of deposit growth, coming in at 23.1%, closely followed by Vermont, at 22.3%.

Washington, D.C., and Arkansas closed out the list, with median growth rates of 8.6% and 10.5%, respectively.

Surge in asset growth

By the close of the fourth quarter, credit union assets at the median were up 14.2%. By contrast, at the close of 2019, median asset growth was 2.8%.

Oregon and Nevada reported the highest median asset growth, at 21.4% and 20.3%, respectively. Washington, D.C., and Arkansas reported the lowest, at 7.5% and 8.8%, respectively.

Delinquencies continue to improve

One of the bright spots for the industry in 2020 was better-than-expected performance around delinquencies, as consumers stayed current on their loan payments thanks in part to reduced spending on other items, government stimulus payments, expanded unemployment benefits and more.

At the median, credit unions had a delinquency rate of 51 basis points at year-end, compared with 66 basis points at the end of 2019.

New Jersey had the highest delinquency rate, at 121 basis points, followed by Vermont at 85 basis points. Delinquencies were lowest in Rhode Island (21 basis points) and Oregon (22 basis points).

Loan-to-share ratio falls 10 points

The industry’s median loan-to-share ratio fell by 10 points over the year to land at 61% at the end of 2020. It was 71% at the end of 2019.

Idaho, which was also a leader in membership and loan growth, had the highest median loan-to-share ratio at 78%, followed by Vermont and Wyoming, which were tied at 77%.

Delaware and New Jersey, which also lagged in loan growth, reported the nation’s lowest median loan-to-share ratios, at 43%, followed by Hawaii and Pennsylvania, which were tied at 45%.

Earnings slide

With lending and membership down, the number of credit unions with positive earnings also fell. NCUA reported that 83% of federally insured CUs had positive net income in 2020, compared with 88% in 2019.

At least 65% of credit unions in every state and Washington, D.C., reported positive net income in 2020. By comparison, that figure stood at 89% at the close of 2019 and 88% at the end of 2018.

New Mexico and Washington saw the highest rates of success (98% each) followed by Montana and Oregon (both at 96%).

Kansas had the lowest share of credit unions with positive earnings, at 69%, followed closely by Maryland and Connecticut at 70%.

ROA falls sharply

Return on average assets fell sharply in 2020, finish the year at 40 basis points compared to 60 basis points in 2019.

Idaho led the way with median ROA of 86 basis points, followed by Utah at 71.

Washington, D.C., and New Jersey reported the lowest results, with ROA of 17 and 18 basis points, respectively.