Credit unions’ net income inched up 2.6% in the first quarter as loan loss provisions rose sharply from a year earlier.
The $2.3 billion earned in the first quarter represented 0.71% of total average assets, down from 0.75% in 2016’s first quarter, and the lowest first-quarter return on assets since at least 2012, according to the NCUA’s quarterly industry report released Monday.
Credit union ROA as an annual average peaked at 0.84% in 2012 and was 0.76% last year. CUNA economists forecast ROA to be 0.75% this year and 0.80% in 2018.
The provision for loan and lease losses rose 27.8% to $1.4 billion. Without that factor, income would have risen four basis points from 2016’s first quarter.
Other components of income moved closer in line with overall industry growth as total assets rose 7.8% to reach $1.34 trillion:
- Interest income rose 8.5% to $11.2 billion.
- Interest expense rose 9.3% to $1.7 billion.
- Net interest income after the provision for losses rose 5.6% to $8.1 billion.
- Fee income rose 8% to $2 billion.
- Other noninterest income rose 3.6% to $2.3 billion.
- Employee compensation and benefits rose 7.5% to $5.2 billion, as total employment rose 3.4%.
- Other noninterest expenses rose 5% to $4.8 billion.
In the past year, credit unions added 11,067 full-time workers and cut 1,300 part-time jobs. They employed 266,367 full-time and 26,938 part-time workers in March. Average salary and benefits was $74,276 per full-time employee on March 31, up 3.5% from a year earlier.
Overall delinquencies were stable. The value of delinquent loans total loans was 0.69% on March 31, down two basis points from a year earlier. The largest increase was in credit cards, which rose 14 basis points to 1.09%.
Credit unions originated $449.2 billion in loans in the first quarter, 13.3% more than in 2016’s first quarter. The leaders in originations were real estate ($150.6 billion, up 16.3%) and member business loans ($26.9 billion, up 32%).
Share drafts rose 6.7% to reach $166 billion on March 31. Credit unions had 108 million members as of March 31, 4.3 million more than a year earlier. The average share balance per member was $10,536, up 3.9% from a year earlier.
Credit unions continued to be fewer and bigger. There were 5,737 federally insured credit unions as of March, 217 fewer than a year earlier. The 517 credit unions with assets of $500 million or more represented 9% of credit unions and 75% all assets.
