Top 10 Credit Unions' Net Income Falls Sharply in Q3

Net income fell sharply for the nation’s 10 largest credit unions from the second quarter to the third quarter because of higher loan loss provisions and lower operating income.

The Top 10 credit unions earned $650.5 million in the three months ending Sept. 30, or an annualized 0.64% of average assets, down from ROA of 0.87% in the second quarter and 1.03% in the third quarter of 2022.

The Top 10 credit unions encompassed 27.2 million members and $406.9 billion in assets as of June 30. The group accounts for nearly 20% of all credit union assets and members.

The group changed as Randolph-Brooks Federal Credit Union of San Antonio returned to the list at No. 10, pushing off First Tech Federal Credit Union of San Jose, Calif. ($16.8 billion, 656,384 members). As always, CU Times revised past figures to reflect the list’s members in the newest quarter.

CU Times analyzes the Top 10 results each quarter to get a quick read on earnings trends for the recently closed quarter. Their earnings fare better than smaller credit unions, but tend to follow the same patterns.

Loan loss provisions were $1.2 billion, and accounted for 12 basis points of the 22 bps decline in ROA from the previous quarter, and 49 bps of the 36 bps decline from a year earlier.

Net operating income, which replaces loan loss provisions with actual charge-offs, was $881.2 million, or a 0.87% operating ROA, down from 1.18% a year earlier and 1.07% in the second quarter. Net charge-offs contributed. They were $952 million in the third quarter, nearly double a year earlier and up 13% from the second quarter.

The net charge-off ratio was 1.33% in the third quarter, up from 0.78% a year earlier and 1.22% in the second quarter. Loan quality also deteriorated measured by delinquencies. The rate for loans at least 60 days late was 1.07% on Sept. 30, up from 0.82% a year earlier and 0.68% on June 30.

Net interest margins are the biggest single factor for income, and helped soften the fall. The margin was 3.61% for the third quarter, up from 3.53% a year earlier and 3.55% in the second quarter.

The Top 10 credit unions in the third quarter were:

1. Navy Federal Credit Union, Vienna, Va. ($168.4 billion, 13.2 million members), which had ROA of 0.59% in the third quarter, compared with 1.14% a year earlier and 1.09% in the second quarter.

2. State Employees’ Credit Union, Raleigh, N.C. ($50.7 billion, 2.8 million members), which had ROA of 0.69% in the third quarter, compared with 1.37% a year earlier and $0.81% in the second quarter.

3. Pentagon Federal Credit Union, Tysons, Va. ($35.4 billion, 2.9 million members), which had ROA of 0.57% in the third quarter, compared with 0.41% a year earlier and 0.36% in the second quarter.

4. BECU, Tukwila, Wash. ($29.2 billion, 1.4 million members), which had ROA of 0.24% in the third quarter, compared with 0.24% a year earlier and 0.70% in the second quarter.

5. SchoolsFirst Federal Credit Union, Santa Ana, Calif. ($28.8 billion, 1.3 million members), which had ROA of 0.6% in the third quarter, compared with 0.98% a year earlier and 0.48% in the second quarter.

6. Golden 1 Credit Union, Sacramento, Calif. ($20.5 billion, 1.1 million members), which had ROA of 0.55% in the third quarter, compared with 0.67% a year earlier and 0.5% in the second quarter.

7. America First Federal Credit Union, Riverdale, Utah ($19.1 billion, 1.4 million members), which had ROA of 1.25% in the third quarter, compared with 1.04% a year earlier and 0.97% in the second quarter.

8. Alliant Credit Union, Chicago ($18.9 billion, 831,626 members), which had ROA of 0.58% in the third quarter, compared with 0.94% a year earlier and 0.37% in the second quarter.

9. Mountain America Federal Credit Union, Salt Lake City ($18 billion, 1.2 million members), which had ROA of 1.13% in the third quarter, compared with 1.55% a year earlier and 1.3% in the second quarter.

10. Randolph-Brooks Federal Credit Union, San Antonio ($17.9 billion, 1.1 million members), which had ROA of 0.97% in the third quarter, compared with 1.05% a year earlier and 1.38% in the second quarter.