A Direct Line Blog

By Donya Parrish, MCU VP Risk Management

I hope some of you had the opportunity to hear Dr. Elliot Eisenberg’s economic update session, hosted by Millennium Corporate Credit Union last week. He shared an update similar to what many others are predicting — that the economy is stronger than it was expected to be for late 2023, the Federal Reserve just indicated they are done raising rates (for now), and there are still risks and unknowns going into the new year that could show up in lending and credit union balance sheets.

Last week, TruStage released their Nov. 2023 Credit Union Trends Report (using September data) and NCUA released financial data from third-quarter Call Reports. NCUA noted the key ratios below in their Quarterly Data Summary Report:

• Total assets in federally insured credit unions rose 3.7 % over the year;
• The delinquency rate at federally insured credit unions was 72 basis points in the third quarter of 2023, up 19 basis points from one year earlier;
• The net charge-off ratio was 56 basis points, up 25 basis points compared with the
  third quarter of 2022;
• The loan-to-share ratio stood at 84.8% in the third quarter of 2023, up from 78.4% in the
  third quarter of 2022;
• The credit union system’s net worth ratio was 10.73% in the third quarter of 2023, compared with 10.60% one year earlier;
• Net income was down 10.3%, compared with the same period a year earlier;
• The annualized return on average assets for federally insured credit unions was 76 basis points in the first three quarters of 2023, down from 88 basis points in the first three quarters of 2022; and
• Total loans outstanding increased 9.1%, over the year.

Looking for a more local picture? You can see a Montana-specific report that we provided to CEOs earlier this week. We’ll see how 2024 turns out. I am thankful that your members have a credit union option to help them through, no matter what the economy does!