Margins Stable in 4th Quarter for Top 10 CUs
Net income rises for the top 10 credit unions, despite drop in real estate originations.
The nation’s largest credit unions maintained their margins in the fourth quarter despite a decline in real estate loan originations.
The Top 10 credit unions by assets generated $701.6 million in net income in the three months that ended Dec. 31, 2018, up 10.1% from 2017’s fourth quarter. Their annualized return on average assets (ROA) was 1.13% for 2018’s fourth quarter, up 2 basis points from a year earlier.
For the year, their net income rose 12.7% to $2.9 billion, as ROA rose 4 bps to 1.19%.
Boosts to fourth-quarter earnings included:
- Net interest before loan loss provisions rose 13% to $2.2 billion.
- Fee income rose 16.4% to $277.1 million.
- Employee compensation rose a modest 2.6% to $778.6 million, as other non-interest expenses fell 0.2% to $758.4 million
Drags to fourth-quarter earnings included loan loss provisions rising 13.4% to $527.5 million, as other operating income rose only 4.4% to $477.6 million.
The Top 10’s total loan portfolio rose 9.7% to $182.1 billion by Dec. 31, outperforming the loan portfolio for all U.S. credit unions, which CUNA estimates show rose 9.1% to $1.07 trillion.
The combined Top 10 real estate portfolios rose sharply for year, fed by big gains by the nation’s largest credit union: Navy Federal of Vienna, Va. The Top 10’s 1st-lien residential real estate rose 9.9% to $85.8 billion, and 2nd-liens rose 30% to $11.2 billion.
However, real estate originations were down sharply in the fourth quarter. The Top 10 produced $8 billion in real estate loans in the fourth quarter, down 14.8% from a year earlier. Real estate originations for the year fell 3.2% to $34.7 billion.
Other types of originations rose 13.6% to $20.5 billion for the quarter, and rose 11.9% to $79.3 billion for the year.
The Top 10’s composition was unchanged, and the rankings shifted only with Golden 1 Federal Credit Union of Sacramento, Calif. ($12.3 billion in assets, 1 million members) returning to No. 6; pushed down a notch was First Tech Federal Credit Union of Mountain View, CA ($12.2 billion in assets, 554,529 members).
The Top 10 credit unions and their margins are:
- Navy Federal Credit Union, Vienna, Va. ($96.9 billion in assets, 8.2 million members) had ROA of 1.72% for the quarter (+3 bps), and 1.65% for the year (+7 bps).
- State Employees’ Credit Union, Raleigh, N.C. ($38.8 billion in assets, 2.4 million members) had ROA of 0.68% for the quarter (-10 bps), and 0.75% for the year (-1 bps).
- PenFed, Tysons, Va. ($24.5 billion in assets, 1.7 million members) had ROA of 0.46% for the quarter (+14 bps), and 0.66% for the year (-15 bps).
- BECU, Seattle ($19.6 billion in assets, 1.2 million members) had ROA of 1.21% for the quarter (+8 bps), and 1.36% for the year (+9 bps).
- SchoolsFirst Federal Credit Union, Santa Ana, Calif. ($15.2 billion in assets, 862,933 members) had ROA of 1.08% for the quarter (+24 bps), and 1.09% for the year (+21 bps).
- Golden 1 Federal Credit Union, Sacramento, Calif. ($12.3 billion in assets, 1 million members) had ROA of 0.56% for the quarter (-9 bps), and 0.8% for the year (-1 bps).
- First Tech Federal Credit Union, Mountain View, Calif. ($12.2 billion in assets, 554,529 members) had ROA of 0.67% for the quarter (-58 bps), and 1.05% for the year (-6 bps).
- Alliant Credit Union, Chicago ($11.2 billion in assets, 439,028 members) had ROA of 0.4% for the quarter (-27 bps), and 0.59% for the year (-15 bps).
- America First Federal Credit Union, Riverdale, Utah ($10.3 billion in assets, 1 million members) had ROA of 1.12% for the quarter (+27 bps), and 1.22% for the year (+15 bps).
- Security Service Federal Credit Union, San Antonio ($9.5 billion in assets, 774,333 members) had ROA of 0.78% for the quarter (+40 bps), and 0.75% for the year (+31 bps).