Credit Quality at U.S. Credit Union, Small Banks Improves YOY in Q2

Credit quality improved at U.S. community banks and credit unions in the second quarter as delinquencies remained muted and net charge-offs tumbled.

Net charge-offs fell by roughly half year over year at both U.S. credit unions and small U.S. banks under $10 billion in assets in the second quarter.

Meanwhile, net charge-offs as a percentage of average loans fell to 0.24% at credit unions in the second quarter, down 24 basis points year over year and 8 basis points quarter over quarter. The NCO ratio at community banks dropped to 0.08% in the second quarter, down 10 basis points year over year and even with the first quarter.

Similarly, the nonperforming assets ratio at U.S. credit unions fell 11 basis points year over year to 0.30% in the second quarter, while it fell 18 basis points year over year at U.S. community banks to 0.69%.

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