Jake Cooke for The Credit Union Connection

Several striking points jump out of the NCUA’s Q3 credit union data. It highlights the good, the bad, and the direction the industry is going.

Year over year, the third quarter of 2024 experienced an increase of $82 billion in total assets in federally insured credit unions, a 3.7% growth to a total of $2.31 trillion. Additionally, insured shares and deposits rose by 2.6% year over year, for a total of $1.76 trillion, an increase of $44 billion. However, the report did not highlight only sunshines, rainbows and growth amongst credit unions. Q3 saw a year-over-year decrease in credit unions’ primary product: auto loans, declined by 3%. NCUA Chairman Todd Harper called it “disappointing.” 

“Credit unions must continue to carefully manage their credit risks and be prepared for any shift in the interest rate environment, both up and down, depending on what happens in the broader economy and in the financial markets, as well as how geopolitical events play out,” Harper said. 

This comes as approximately 20% of credit unions have a composite CAMELS code of between 3 and 5. With one in five credit unions in a potentially precarious risk management situation, it is of the utmost importance that industry leaders remain diligent in the management of their institutions.

Share certificate accounts grew a whopping 24% or $106.8 billion, year over year into Q3 2024, to a total of $551 billion. This increase, due to credit unions offering higher rates on these funds to bring in liquidity, in these higher interest savings accounts has led to an increase in cost of funds for credit unions. 

“We've been seeing the cost of funds definitely go up because of that increase in share certificates, but it hasn't played out yet through the net interest margin,” NCUA Director of Examination and Insurance Kelly Lay said.

Across the board the number of credit unions in operation fell in nearly every category - all except those with assets between $1 billion and $10 billion. Every other sized credit union saw a decrease in the number of institutions in operation. 

When you look at changes in membership rates, there is a clear disparity dependent on the size of the institution. Membership consistently declined across credit unions with less than $1 billion in assets, while credit unions with more than $1 billion assets saw membership increases of more than 5% on average. This aligns with the mergers we see each day; many are smaller credit unions merging into larger ones because they can’t find a way to stay in business.