by. Aaron Passman
Loans, membership, and net worth at federally insured credit unions continued to rise during the last quarter of 2013, but net interest margins remain on the decline, according to fourth-quarter data released by NCUA.
NCUA chairman Debbie Matz warned in a statement that while the current rate environment has created challenges for profitability, credit unions must steer clear of over-concentration in long-term investments. Compressed net interest margins also led to a lower return on average assets year-over-year.
“It’s easy to get trapped chasing near-term profits by increasingly concentrating investments in long terms,” said Matz in a statement. “That can imperil a credit union because it increases interest rate risk. The growth in five-to-10 year investments of nearly 60% is cause for concern. For many credit unions it may be prudent, at this time, to accept lower return on assets to avoid exacerbating interest rate risks.”
The final quarter of 2013 marked the 11th consecutive quarter of loan growth with loans at credit unions increasing by 2.2% during the final quarter of 2013.
Lending rose 8% compared to the end of 2012, including increases in nearly every loan category. Other loan growth highlights include:continue reading »