Iowa Credit Unions Post Strong Performance In 3Q 2013

Loan interest income increased by 1.7 percentage points while growth in loans and shares surpassed national averages.

 
 

The credit union industry turned out a strong financial performance in the third quarter of 2013, posting the highest-ever average member relationship and the largest loan origination volume on record as well as growing membership, capital, and shares. Iowa credit unions posted an even stronger growth in loans and shares than credit unions nationwide. Their third quarter success highlights the increasing competitiveness of Iowa credit unions in their marketplaces and their improving local economies. Iowa’s unemployment was 4.7% at the end of September. By comparison, the national unemployment rate was 7.2%.

Iowa credit unions excelled in various areas. According to third quarter 2013 data collected by Callahan & Associates, Iowa credit unions increased outstanding loan balances by 12.0% over the previous September. Comparatively, the industry average increase was 6.8%. Loans outstanding at Iowa credit unions reached nearly $8.0 billion as of September 2013. Total loan originations at Iowa credit unions were also up 3.7% over the first nine months of 2012. Consumer loans and other real estate loans led this jump with increases of $86.2 million and $84.6 million, respectively.

YTD LOAN ORIGINATIONS BY COMPONENT
Data For September 30 For All Iowa Credit Unions
© Callahan & Associates | www.creditunions.com

ytd_loan_originations

Source: Callahan & Associates’ Peer-to-Peer Analytics

Total income for Iowa credit unions was up 1.97 percentage points to $435.2 million through September 2013. Nationwide, income at credit unions decreased 1.32% during the same period. Although both average investment yield — 1.44% — and average loan yield — 5.01% — fell, loan interest income increased 1.7% from September 2012 at Iowa credit unions. Nationally, it fell 2.3%. This is partly the result of an increase in the total amount of loans originated at Iowa credit unions over the past year. The 6.2% annual increase in non-interest income contributed to a further rise in total income at Iowa credit unions.

Iowa reported a 2.91% net interest margin in the third quarter; that’s 11 basis points higher than the national average. Iowa credit unions’ operating expense ratio, including stabilization expenses, stood at 3.03% versus the national average of 3.16%. Because of a higher net interest margin and relatively lower operating expense ratio, Iowa credit unions posted a higher ROA, 1.06%, than the national average of 0.80% for the third quarter.

ANNUALIZED YTD ROA
Data For All Iowa Credit Unions
© Callahan & Associates | www.creditunions.com

Annualized_ytd_roa

Source: Callahan & Associates’ Peer-to-Peer Analytics

Asset quality for Iowa credit unions is stronger than averages for savings banks within the state, banks nationwide, and credit unions nationwide. Iowa’s credit union delinquency rate fell by three basis points to 0.97% at the end of September; meanwhile, net charge-offs climbed four basis points over the past year to 0.40%.

Iowa credit unions exceeded the 4.1% national average when they posted 9.0% growth in the share portfolio, topping $10.1 billion as of September. Such strong share growth is partly the result of robust core deposit growth. For instance, share drafts at Iowa credit unions increased 13.3% annually, which is almost double the industry average growth. With growth in loans outpacing shares, the loan-to-share ratio increased to 78.8% as of September 2013, up 2.05 percentage points from the previous September.

ANNUAL SHARE GROWTH BY COMPONENT
Data As Of September 30, 2013, For All Iowa Credit Union
© Callahan & Associates | www.creditunions.com

share_growth

Source: Callahan & Associates’ Peer-to-Peer Analytics

Iowa credit unions brought in 15,820 new members, which helped the Hawkeye cooperatives post a 1.6% year-over-year growth in membership. Iowa credit unions now serve approximately 1.02 million members. Growth in loans, shares, and members contributed to an 8.1% annual growth in the average member relationship — which is calculated by combining loan and share balances per member, excluding member business loans. As of September, the average member relationship at Iowa credit unions was $16,908.

Capital levels remain in the double digits, 10.7%, at Iowa credit unions. This exceeds bank peer averages on both regional and national levels; however, the national credit union average, 11.1%, tops it.

Despite ongoing uncertainties regarding interest rates, Iowa credit unions recorded a solid increase in interest income and their financials remain strong. With continued growth in loans, shares, membership, and capital, the earnings model for Iowa credit unions will provide ample opportunity for future growth.

 

 

 

Dec. 10, 2013


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