Credit Union Earnings Show Slight Improvement From March

Credit union earnings remained down in the second quarter, but the post-pandemic hit showed slight improvement from the first quarter.

For the three months that ended June 30, the nation’s 5,275 credit unions generated $2.6 billion in net income, down 29.2% from 2019’s second quarter.

Their annualized return on average assets was 0.61% for the second quarter, compared with 0.53% for the first quarter when COVID-19 wasn’t declared a pandemic until March 11, and 0.97% in the pre-pandemic era of 2019’s second quarter.

The national economy has been bolstered by the economic stimulus hammered out by Congress and signed by President Trump in March, economist Elliot Eisenberg said Wednesday.

He expects conditions to continue to improve for the third quarter, but he said the pace of improvement has slowed and July’s expiration of the federal $600 weekly boost to unemployment benefits might start triggering consumer retrenchment and more layoffs.

“We need this money because the economy is slowing,” he said. “Budget deficits will rise, but the alternative is worse. We don’t want thousands or millions of people to lose their jobs.”

While U.S. economic growth fell 5% in the first quarter and about 31% in the second, he expects GDP will rise 15% to 20% in the third quarter and 6% to 8% in the fourth.

Eisenberg said housing has been the standout performer in the current recession, which was reflected in credit union results for the second quarter released Thursday by the NCUA.

Total loan originations during the three months ending June 30 were $174.5 billion, up 28% from 2019’s second quarter.

Originations of first mortgages during the second quarter nearly doubled to $79.4 billion, while non-real estate loan originations rose only 1.3% to $87 billion.

The average loan balance among members rose 3% to $9,288, but they remained bearish with their cash, with the average savings balance rising 12.6% to $12,191.

Larger credit unions continued to perform better than smaller ones. This can be seen in second-quarter ROA when credit unions are grouped by size so that each group has rough parity in assets and memberships.

• For small credit unions (less than $1 billion in assets), ROA was 0.46% during the three months ending June 30, down 34 basis points.
• For medium-sized credit unions ($1 billion to less than $4 billion), ROA was 0.60%, down 29 bps.
• For large credit unions ($4 billion or more), ROA was 0.73%, down 44 bps.