Quarterly Pulse — Q3 2024

System at a Glance

Capital Adequacy

The capital picture ranks 10th out of 35 quarters in the dataset — solidly mid-range historically. Credit unions under $100M continue to hold the thickest buffer at 13.44%, while the over-$10B cohort runs thinnest at 10.20%. The $1B–$10B tier sits at 10.67%, just below the system average, reflecting the higher leverage that comes with their loan-heavy balance sheets (71.94% loans-to-assets).

Asset Quality

The over-$10B cohort again leads system delinquency at 1.34%, sitting 43 bps above the system average. The concentration of stress at the top of the asset distribution reflects the outsized auto and consumer lending portfolios of the largest institutions. The $1B–$10B tier, at 0.73%, is performing materially better — a gap that speaks to different portfolio compositions rather than different underwriting cycles.

Net charge-offs eased fractionally to 0.77% annualized, down 1 bps from Q2's 0.79% — the second consecutive quarter of modest NCO improvement even as delinquency continues to rise. This divergence suggests institutions are managing the charge-off pipeline actively (through workouts and extensions) rather than seeing organic resolution. Whether that's prudent forbearance or loss deferral depends on how the delinquent balances ultimately resolve through Q4 and into 2025.

Earnings

The margin recovery is gradual — just 10 bps cumulative from the trough — but directionally consistent. The over-$10B cohort leads on NIM at 3.33%, benefiting from diversified fee income and larger-scale asset management. The $1B–$10B tier lags at 2.85%, 22 bps below the system average, as competitive pressure on loan pricing weighs on yield. The $500M–$1B cohort remains the ROAA laggard at 0.52%, squeezed by mid-sized operating costs.

Year-to-date net income stands at $12.0 billion through 9 months, trailing the $12.6 billion reported through 3Q23. The shortfall is driven by higher provision expense: credit costs have risen in lockstep with the delinquency trajectory, consuming much of the NIM improvement. The Q3 annualized ROAA of 0.69% ranks 27th of 34 quarters — below the long-run median but stabilizing after the 0.66% trough in Q1 2024.

Loan Growth & Composition

The $1B–$10B tier led loan growth at 1.64%, followed by the over-$10B cohort at 1.22%. Credit unions under $100M were essentially flat at -0.04%, continuing the pattern of lending market share consolidating toward larger institutions. The loans-to-assets ratio edged up to 70.50%, its second consecutive quarterly increase, as loan growth outpaced the broader balance sheet expansion.

Liquidity

The loans-to-assets ratio at 70.50% ranks 7th of 35 quarters in the dataset — elevated but below the 71.76% peak (Q4 2018). The Q2 share contraction had pushed the ratio higher; Q3's deposit return slowed the climb. The over-$10B cohort runs at 72.33% and the $1B–$10B tier at 71.94% — both near the top of their historical ranges.

The $14.8 billion reduction in borrowings from the Q4 2023 peak signals that the acute wholesale funding pressure of 2023 is easing. But borrowings at $118.3 billion remain well above pre-pandemic norms, and the loans-to-assets ratio leaves limited room for the balance sheet to absorb deposit outflows if the seasonal Q4 share growth doesn't materialize.

Regulatory Note

The NCUA's final 2024 board meeting — Chairman Harper's last presiding — approved two items unanimously: a succession planning final rule requiring all federally insured CUs to establish written succession plans by January 1, 2026, and the 2025–2026 budgets ($395.8M, 1,255 positions) with operating fees numerically lower than 2024. Soul Community FCU was chartered in Hazlehurst, GA — a community with zero prior financial institutions. Full Board Meeting Digest →

Standardized Data Table — Q3 2024

Key CAMELS-aligned metrics by asset-size cohort for the quarter ending September 30, 2024. Income-based ratios annualized from 9-month YTD figures (×4/3). Growth rates are single-quarter (QoQ).

Notable Moves This Quarter

• Watch: Delinquency sets another record — The 60+ day ratio reached 0.91%, the highest in the dataset and the second consecutive quarterly increase. The over-$10B cohort leads at 1.34% — 43 bps above the system average.
• Favorable: NIM recovery extends to three quarters — Net interest margin reached 3.07% annualized, up 4 bps QoQ and 10 bps cumulative from the 2.97% Q4 2023 trough. The improvement is gradual but directionally consistent.
• Watch: Deposits return to growth — Shares grew 0.90% QoQ after declining in Q2 (-0.25%), easing funding pressure. Borrowings edged down $1.5 billion as institutions substituted wholesale funding at the margin.
• Watch: NCO and delinquency diverge — Net charge-offs improved fractionally to 0.77% annualized (-1 bp QoQ) even as delinquency rose 7 bps. The divergence raises questions about whether loss recognition is keeping pace with credit deterioration.
• Pressure: Sub-$100M lending stalls — Credit unions under $100M posted -0.04% loan growth, essentially flat, as the secular shift of lending market share toward larger institutions continues.