FMS Article: Credit Unions — Quarter 1 Analysis

The following article can be found on the blog page of the FMS website.


By Mark Loehrke, Editor, Financial Managers Society

The nation’s federally insured credit unions kicked off 2018 with a bang, as the NCUA’s recently released data for the three months ended March 31 once again revealed a number of ongoing positive trends:

The Big Numbers
Net income was the eye-popper of the first quarter report, vaulting 2017’s first quarter number by 35.4% to a total of $12.6 billion. Both total assets ($1.42 trillion) and deposits ($1.13 trillion) also enjoyed respectable jumps over the same period last year, with increases of 5.9% and 5.5%, respectively. Meanwhile, total credit union membership moved up to 112.7 million in the first quarter – an annual gain of 4.7 million members.

Lending Strength
Total loans outstanding once again grew from a year earlier, rising 9.9% to a total of $972 billion. Leading the lending charge were several familiar categories, with notable year-over-year gains in both new auto loans (12.2%) and used auto loans (10.2%). Elsewhere on the asset side of the balance sheet, credit card balances rose 10%, and non-federally guaranteed student loans rose climbed by 13.9%. Delinquency rates across most loan categories dipped slightly compared to the first quarter of 2017.

Rising Expenses and ALLL
Interest expense totaled $8.4 billion annualized in the first quarter of 2018, up 23.3% from one year earlier, while non-interest expenses grew by 7.7% and labor expenses were up 7.2%. Across the credit union system, the average provision for loan and lease losses rose 17.8% to $6.7 billion at an annual rate in the first quarter of 2018.

Big Get Bigger

While the overall number of credit unions continued to decrease in the first quarter, the $1 billion+ and $500m-1b asset groups both added institutions, and also outperformed their smaller peers in terms of loan growth, net worth and membership gains.