Top 10 Credit Unions' Earnings Rise as Loss Provisions Fall

The nation’s largest credit unions nearly tripled their earnings margin in the first quarter as loan loss provisions fell back to pre-pandemic levels and cuts in overhead made up for lower income.

A CU Times analysis of NCUA Call Reports filed last week showed the 10 largest credit unions earned $1.2 billion, up from $367.6 million in 2020’s first quarter. Their annualized return on average assets was 1.48%, up from 0.51% a year earlier.

The increase came despite a surge in savings, which contributed to a 12.4% rise in average assets. Loan growth was tepid, with balances rising 4.5% to $201.8 billion.

Originations of all types of loans grew 13.8% to $38.5 billion in the first quarter.

First mortgages remained the engine of loan growth. The Top 10 generated $13.9 billion in first mortgages in the three months ending March 31, up 33% from 2020’s first quarter.

The production was better than the fourth quarter, when first-mortgage originations rose 11% to $12.2 billion, but worse than 2020’s third quarter, when originations rose 42% to $14.6 billion.

Among all lenders, the Mortgage Bankers Association said it expects first-mortgage originations to rise 94% to $1.1 trillion in the first quarter, rise 5% to $974 billion in the second quarter and then start to show declines in year-ago comparisons in the second half.

The MBA said it expects total first-mortgage originations to fall 14% this year, as refinances fall 32% and purchases rise 16%.

The Top 10 list is ranked by assets, and in the first quarter Suncoast Credit Union of Tampa, Fla., ($13.5 billion in assets, 942,111 members) returned to the Top 10 by nosing out Randolph-Brooks Federal Credit Union of San Antonio ($13.4 billion in assets, 959,680 members).

Suncoast lost its place to Randolph-Brooks in last year’s third quarter, but that line-up could change again. Besides those 11 credit unions, there were at least seven others with more than $10 billion in assets, several with fast asset growth.

Whatever the makeup of the Top 10, current results are compared with results for the same cohort of credit unions regardless of their ranking in previous quarters.

The main purpose of the Top 10 analysis is to get an early indication of quarterly conditions among credit unions.

The Top 10 had a collective $349.3 billion in assets and 22 million members as of March 31 — more than 15% of the nation’s credit union members and assets. Although they tend to have higher operating margins and offer a wider range of products than smaller credit unions, their trends generally track with the rest of the movement.

And for ROA, the trend showed consistent improvement since the second quarter of 2020.