Third 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 September 30, 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:
ROA for all U.S. credit unions remains very high, with ROA 111 basis points in Q3 as it was in Q2. ROA for New England continues to lag the rest of the country with a ROA of 32 basis points in Q3 up slightly compared to 29 basis points in Q2.
Margins have stabilized but remain at very low levels due to continued historic low rates – the net interest margin for Q3 ticked up by two basis points for the U.S. and one basis point for New England.
Credit quality remains very strong; the New England delinquent loans to total loans ratio increased in Q3 but is still very good at 79 basis points. This ratio for the U.S. of 46 basis points has remained unchanged. Charge-offs continue to be close to zero in New England at nine basis points in Q3 compared to eight basis points in Q2. On a national level, net charge-offs are much higher but also stabilized.
Capital and Liquidity
Credit unions have seen the loans to deposits ratio stabilize in the last three quarters after trending down due to the COVID-19 related run-up in deposits. On a national level, this ratio is much higher than in New England.
With the loans to deposits ratio remaining unchanged, capital ratios have also stabilized. The average net worth ratio for New England as of September 30, 2021, is up 15 basis points compared to Q2 and the ratio is up 7 basis points for the same period in the entire U.S.
Peer Data for New England Banks
Linked below is our compilation of peer financial information for the nine months ended September 30, 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 second quarter saw margins improve slightly in New England, with net interest margin increasing to 3.06% at the end of the second quarter vs. 3.03% at the end of the second quarter. Nationally, net interest margins also increased slightly compared to last quarter.
Operating Income to Total Assets improved slightly from the second quarter, but ROA and ROE both declined 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 (4 basis points) and non-performing loans to total loans ratios (55 basis points) below national averages.
Click HERE for the full report.
If you would like to discuss the information in further detail, we would be happy to do so.
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