Growing signs of concern in loan performance and earnings in 2024 across all credit unions and individual institutions are cited in their federal regulator’s annual report, issued Tuesday by the agency.
The National Credit Union Administration (NCUA), in its annual compendium of developments for the year from its regulatory standpoint, said the “financial stress has manifested itself in the number of credit unions and the percentage of assets held by composite CAMELS code 3, 4, and 5 credit unions.“
However, despite that, the agency said in 2024 that overall credit unions remained “largely stable in its performance and relatively resilient against economic disruptions.”
As examples, the agency points to credit union memberships in 2024 growing to more than 142.3 million members and assets rising to $2.31 trillion. The agency also notes that credit unions’ aggregate net worth ratio ended the year at 11.20%, which it notes is “well above the 7% statutory level for being considered well-capitalized.”
Year-end numbers released by the agency last week, however, illustrated the issues in performance and earnings. Those numbers showed loan delinquencies in 2024 rose by 15 basis points (bp), to 0.98% of loans, compared to the previous year. The net charge-off ratio was 80 bp in the fourth quarter of 2024, up 19 bp compared with the fourth quarter of 2023, NCUA said. Meanwhile, the return on average assets (ROAA) was just 63 bp in 2024, down from 68 bp from the prior year, the NCUA numbers show. Net income was down 3.6% from 2024 (to $14.4 billion).
Other key points about the agency’s actions in 2024 as included in the report are:
- NCUA field staff completed 3,778 supervisory contacts and reported 564,970 examination hours, compared to 3,735 supervisory contacts and 534,195 examination hours in 2023. The agency asserted that last year exams and onsite contacts increased slightly due to a decline in industry CAMELS ratings (the system the agency uses to evaluate credit union performance and safety and soundness).
- Two credit unions were placed into conservatorship and, by year’s end, there were a total of three credit unions operating under the NCUA’s conservatorship.
- There were three credit union failures in both 2024 and 2023, costing the National Credit Union Share Insurance Fund (NCUSIF) respectively (as of the end of the year) $2 million and $1.4 million. The final costs, NCUA added, will change depending on the performance of the remaining assets of the failed credit unions.
- Enforcement actions against federally insured credit unions in 2024 were down from 160 in 2023 to 153 in 2024 (about 4.3%).
- 24 individuals were prohibited from participating in the affairs of any federally insured financial institution, compared to 19 in 2023.
NCUA Releases 2024 Annual Report