Credit unions with fewer than $10 million in assets gained networth in the second quarter of 2014, but trailed behind largercredit unions in loan growth, net worth growth, membership andreturn on average assets, the NCUA reported Tuesday.

Overall, federally insured credit unions had the highestyear-over-year loan growth since 2006, with lending increasing inevery category, according to call report data ending June 30.Outstanding loan balances rose 9.8% from the second quarter of 2013to $673.9 billion. New auto loans grew the most, increasing 17% to$77.7 billion.

Total investments by federally insured credit unions decreased2.7% from the second quarter of 2013. Total investments as a shareof assets dropped nearly 2% from the second quarter of 2013 andlong-term investments did not change.

“Though stabilizing as a share of assets, high levels oflong-term investments in the asset portfolio could poseinterest-rate risk for federally insured credit unions as interestrates rise,” the agencysaid.

Membership at federally insured credit unions reached a new highof 98 million in the second quarter of 2014, growing 909,452.

However, the amount of federally insured credit unions droppedto 6,429 at the end of the second quarter 2014 – 252 fewer than thesecond quarter of 2013.

The aggregate net worth ratio for federally insured creditunions in the second quarter of 2014 was 10.77%, representing a 27basis point increase compared to the second quarter of 2013.

“Overall, federally insured credit unions remainwell-capitalized, with 97% reporting a net worth at or above thestatutorily required 7%, compared to 96.2% at the end of the secondquarter of 2013,” the NCUA said. “Less than 1% of federally insuredcredit unions are below the adequately capitalized standard.”

Total assets grew 4.5%, or $47.3 billion, from the secondquarter of 2013, increasing to more than $1.1 trillion for thefirst time. Share and deposit accounts decreased but were still3.4% higher than at the end of the second quarter of 2013.

“The industry's net long-term asset ratio remained high – 35.4%– so interest-rate risk remains a serious threat,” the agencywarned.

Large credit unions with more than $500 million in assetscontinued to grow but smaller credit unions declined in many keycategories.

“These 448 credit unions held $760 billion in combined assets,69% of the system's total assets during the quarter. They alsoreported faster growth and higher returns on average assets thanthe credit union system as a whole,” the NCUA reported.

According to the NCUA's data for the second quarter of 2014, the2,068 credit unions with fewer than $10 million in assets saw a1.1% growth in net worth, compared to 9.2% for credit unions withmore than $500 million in assets.

Loan growth at credit unions with fewer than $10 million inassets was 1.5% during the same period and 12.1% for the nation'slargest credit unions.

“A stronger economy and a stronger credit union system gohand-in-hand. Credit unions continue to make the loans that helppeople buy cars and homes, pay college tuition and start or expandsmall businesses,” NCUA Board Chairman Debbie Matz said. “However,the slight decrease in long-term investments as a share of assetsover the past quarter is not enough to alleviate interest-raterisk. Long-term fixed-rate assets remain elevated, andinterest-rate risk continues to be a key concern and a supervisorypriority for NCUA.”