Solid Balance Sheet Growth
Navy Federal Credit Union ended 2005 with $24.6 billion in assets, up 7.5 percent from year-end 2004, according to data submitted to Callahan’s First Look program. The increase was led by year-over-yearloan growth of 15.5 percent, including a 24.1 percent increase in real estate loans. First mortgage loans outstanding grew to $4.69 billion, a 7.4 percent increase, on $5.39 billion of originations. Other real estate loans reached $3.29 billion with$2.61 billion of originations.
Navy’s 25.5 percent money market deposit growth runs counter to the industry’s slow share growth trends. Current dividend rates are reaching 3.72 percent. Double-digit share draft deposit growth reinforced the strength of their core depositbase. One factor leading to high share growth was the 150,000 new members that Navy added this year, resulting in a 6.0 percent increase in membership.
| Dec.’05 | 12-Month Growth | |
| Assets | $24,644,356,803 | 7.5% |
| Loans | $16,703,197,810 | 15.5% |
| Shares | $18,940,275,087 | 7.5% |
| Capital | $ 2,893,532,238 | 11.8% |
| Members | 2,665,859 | 6.0% |
| Dec’04 | Dec.’05 | |
| Loan/Share | 82.1% | 88.2% |
| Capital/Assets | 11.3% | 11.7% |
| Interest Income/Avg. Assets | 4.93% | 5.26% |
| Cost of Funds/Avg. Assets | 1.84% | 2.12% |
| Net Interest Margin | 3.09% | 3.14% |
| Op. Expenses/Avg. Assets | 2.52% | 2.51% |
| Loan Loss Prov./Avg. Assets | 0.56% | 1.03% |
| Non Interest Inc./Avg. Assets | 1.40% | 1.52% |
| ROA | 1.42% | 1.12% |
ROA of 1.1 Percent
Navy’s total revenue grew 18.5 percent in 2005 versus the prior year. Rising rates helped fuel revenue growth, with loan interest income up 11 percent and investment income up 73 percent. Though loan yieldsdeclined by 16 basis points to 6.63 percent, yields on investments increased significantly to 3.2 percent, up 120 basis points from 2004. Expenses grew 10.1 percent with the office operations and loan servicing categories increasing by the largestdollar amounts.
A doubling of the provision for loan loss, driven by the October 2005 bankruptcy law change, and a higher cost of funds resulted in a 12.6 percent decline in Navy’s net income versus 2004 results. Even with a decline in net income, Navy recordedan ROA of 1.1 percent.
The nation’s largest credit union continues to grow and bring significant value to its members. As a bellwether for the industry, Navy’s success in 2005 provides an important indicator for credit unions nationally.