Credit Union Income Spikes With Rebate
First-quarter gain reaches 35% with NCUA insurance distributions.
The nation’s 5,647 federally insured credit unions also increased expenses at a slower pace than gains in net interest income and fee income. Altogether, net income rose 35.4% to $3.1 billion.
Most federally are set to receive $735.6 million this year from the rebate, and many credit unions recorded the one-time gain in the three months that ended March 31 as part of non-interest income, according to an NCUA report released earlier this month.
The NCUA board approved the Share Insurance Fund equity distribution Feb. 15 as a result of the closing of the corporate stabilization fund.
The boost from the rebate was also reflected in credit unions annualized return on average assets (ROA) which stood at 0.91% for the three months ending March 31, up from 0.71% in 2017’s first quarter and 0.75% in the three months ending in Dec. 31, 2017.
Steven Rick, CUNA Mutual’s chief economist, said the credit union movement’s average ROA masks large disparities between large and small credit unions.
First-quarter ROA was 0.92% for credit unions with $50 million or more in assets, up from 0.72% a year ago. For credit unions with under $50 million in assets, ROA was 0.31% in the first quarter, up barely 1 basis point, according to an analysis of NCUA data.
Credit Unions apparently recorded the insurance pool rebates in the NCUA’s “Other Operating Income” account, which generated $2.8 billion during the first quarter, up 27.8% from the $2.2 billion in 2017’s first quarter. The size of the gain — $605.5 million — compares with first-quarter gains of $154 million in 2017 and $137.7 million in 2016. The NCUA has said the full amount would be paid by the third quarter so the remainder of the rebate will show up in future reports.
By comparison, fee income—the other main component of non-interest income—rose 6.1% to $2.1 billion.
Net interest income rose 10.2% to $8.9 billion. The net interest margin was $42.3 billion, or 3% of average assets, compared with $38.0 billion, or 2.9% of average assets, in 2017’s first quarter.
Employee compensation and benefits rose 7.2% to $5.6 billion, while all other non-interest expense rose 8.2% to $5.2 billion.