Net income for the top 10 credit unions rose 18% in the second quarter with strong gains in interest and fee income despite a slowdown in real estate lending.
An analysis of the latest NCUA call reports by CU Times show the largest credit unions based on assets generated a combined $676.8 million in profits in the three months ending June 30, compared with $573 million from April through June 2016.
The largest credit unions have typically been performing better than smaller ones. NCUA expects to release second-quarter data for all credit unions in early September.
Of the 5,922 credit union in operation at the end of May, the 10 largest accounted for roughly 14% of the members and 16% of total assets.
Their combined net worth rose 11% to $23.4 billion as assets grew 9% to $223.2 billion from June 2016 to June 2017. As result, their net worth ratios stood at 10.49% on June 30, up from 10.25% a year earlier. All remained “well capitalized” in both periods under the NCUA classification. Membership rose 10% to 15.4 million
Their loan portfolios grew 11% to $154.3 billion, led by new car loans ($18.5 billion, +17%), used cars ($17.8 billion, +12%), and credit cards ($18.4 billion, +14%).
The top increases for new car loan balances were:
- 83% to $1.34 billion at Alliant Credit Union of Chicago ($9.9 billion in assets, 368,681 members)
- 35% to $2.4 billion at The Golden 1 Credit Union of Sacramento, Calif. ($11.2 billion in assets, 875,026 members)
- 34% to $921.12 million at SchoolsFirst Federal Credit Union of Santa Ana, Calif. ($13.9 billion in assets, 759,177 members)
The largest percentage gain in the portfolios was made by private student loans, which rose 59% to $438.7 million. But those loans accounted for less than 1% of total loans even among the six that engaged in student lending.
The student lenders were Navy Federal of Vienna, Va. ($82 billion in assets, 7,188,926 members), Pentagon Federal Credit Union of Alexandria, Va. ($22.8 billion in assets, 1,604,361 members), BECU of Seattle ($17.2 billion in assets, 1,044,378 members), Alliant, First Technology Federal Credit Union of Mountain View, Calif. ($10.6 billion in assets, 488,067 members) and Star One Credit Union of San Jose, Calif. ($9.3 billion in assets, 100,054 members).
Business lending was the next fastest growth area. The portfolio of member and non-member business loans grew 29% to $4.1 billion. PenFed, which had the smallest portfolio of business loans, had the biggest increase. They rose 90% to $72.6 million. Business loans at BECU, which had the biggest portfolio, rose 50% to $1.1 billion.
Credit union executives have said that they expect the cooling of the refinance boom to dampen overall mortgage originations.
That real estate slowdown can be seen in the value of loans granted during the three months ending June 30. The top 10 granted $8.9 billion in real estate loans during the second quarter, up 1%, while grants of non-real estate loans rose 13% to $16.6 billion.
While total real estate originations rose 36% at Alliant and 16% at PenFed, they fell 45% at Star One, 26% at Golden 1, 21% at Security Service of San Antonio, Texas and 9% at First Technology of Mountain View, Calif.,. The others recorded single-digit gains.
The biggest increase in profits was at State Employees’ Credit Union in Raleigh, N.C.: They more than doubled from the $37.9 million earned in 2016’s second quarter to $80.9 million in the three months that ended June 30. The biggest factor was the timing of one-time gains between the first and second quarters.
Profits nearly doubled to $12.6 million at Security Service ($9.6 billion in assets, 746,605 members). Non-interest income rose 14% while non-interest expenses were flat.
First Tech was the only credit union in the group to show a decline in net income. It fell 27% to $23 million. Non-interest income was flat while non-interest expenses rose 24%.
