Fourth Quarter Report, 2021
Peer Data for New England Credit Unions
Attached is our compilation of financial information for New England credit unions. Click PEER REPORT to view the December 31, 2021 data. In the data, each New England state has its own tab, and there is a final tab that includes all New England credit unions.
The data includes several key credit quality, performance, liquidity, and capital adequacy ratios. We then break out certain ratios that we consider important in determining the financial performance and long-term viability of credit unions.
These key ratios are:
- Return on assets.
- Net interest margin.
- Ratio of operating expenses to gross income.
- Loans to shares.
From there, we rank the credit unions across each of these key ratios and determine an overall ranking based on the average of all these ratios.
On the “all New England” tab, we have included comparable ratios for all credit unions in the U.S. and comparable prior period ratios for New England credit unions.
Some quick observations on the results are as follows:
Performance
ROA for all U.S. credit unions remains very high, with an ROA of 106 basis points in Q4 compared to an ROA of 111 basis points in Q3 and Q2. ROA for New England has been very consistent over the four quarters in 2021 and continues to lag the rest of the country with a ROA of 30 basis points in Q4 down slightly compared to 32 basis points in Q3 and 29 basis points in Q2.
Margins have stabilized throughout 2021 but remain at low levels due to continued historic low rates – the net interest margin for New England credit unions remained relatively flat for 2021 ranging from 2.52% to 2.49%. National, margins are slightly higher and equally stable, ranging from 2.71% to 2.67%.
Credit Quality
Credit quality remains very strong; the New England delinquent loans to total loans ratio improved in Q4 compared to Q3, going down six basis points to .73%. This ratio for the U.S. of 49 basis points has remained unchanged for the entire year. Charge-offs continue to be close to zero in New England at nine basis points in Q4 and Q3. On a national level, net charge-offs are much higher at 26 basis points but also stable compared to prior quarters.
Capital and Liquidity
Credit unions have seen the loans to deposits ratio stabilize in 2021 after trending down in 2020 due to the COVID-19 related run-up in deposits. For 2021 the New England ratio started the year at 56.53% and ended the year at 56.94%. On a national level, this ratio is much higher – starting the year at 68.80% and ending the year at 70.12%.
With the loans to deposits ratio remaining unchanged, capital ratios have also remained stable. The average net worth ratio for New England started the year at 11.75% and ended the year at 11.74%.
This information is publicly available, so it may be shared with others in your credit union, including board members. Please send us the email address of others that are interested in being added to our mailing list.
If you would like to discuss the information in further detail, we would be happy to do so.
Peer Data for New England Banks
Linked within this email is our compilation of peer financial information for the year ended December 31, 2021. Consistent with last quarter, each New England state has its own tab, and there is a final tab that consolidates all the banks in New England.
The data includes a number of key credit quality, performance, and capital adequacy ratios. We also include simple averages for each state and comparable ratios for all FDIC-insured institutions in the $100 million to $1.0 billion and $1.0 billion to $10.0 billion ranges.
The fourth quarter saw margins stay flat in New England, with a net interest margin of 3.06% at the end of the fourth and third quarters. Nationally, net interest margins declined slightly compared to last quarter.
Operating Income to Total Assets declined slightly from the third quarter, however, ROA and ROE both increased over that same period. Please keep in mind that the Operating Income to Total Assets ratio excludes tax-effected (at 21%) equity security gains from net income, and the ROA and ROE ratios include annualized equity security gains.
Credit quality continues to be strong for New England banks with net charge-offs (5 basis points) and non-performing loans to total loans ratios (53 basis points) below national averages.
This information is all publicly available, so it can be shared with others in your bank, including board members.
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