Top 10 Credit Unions: Earnings Rise From Q4 to Q1

Revenues weakened in the first quarter for the nation’s 10 largest credit unions, but their earnings improved as they took lighter provisions for loan losses than in the fourth quarter.

The Top 10 earned $776.6 million in the three months ending March 31, or an annualized 0.74% of average assets. ROA was up from 0.39% in the fourth quarter, but down from 1.05% in 2023’s first quarter.

Provisions for loan losses was the biggest factor. They were 1.18% of average assets in the first quarter, up from 96% a year earlier, but down from 1.58% in the fourth quarter.

Other factors were narrower net interest margins and lower non-fee operating income. Fees showed little change.

Loan quality was slightly worse than 2023’s fourth quarter, and remained much worse than a year earlier.

Loans at least 60 days late were 1.33% of total loan value on March 31, up from the 0.89% delinquency rate of March 2023, but unchanged from Dec. 31. The net charge-off ratio was 1.78%, up from 1.18% a year earlier and down from 1.87% in the fourth quarter.

Instead of an improvement, results from the fourth quarter to the first quarter deteriorated based on net operating income, which replaces provisions for loan losses used to calculate net income with actual net charge-offs.

Credit unions generated $685.7 million in net operating income in the first quarter, or an annualized 0.65% of average assets, down from 1.19% from a year earlier and 0.70% in the fourth quarter.

Loan production is typically the lowest of the year in the first quarter, but even comparing to last year’s first quarter, originations fell in almost every major category.

The exception was home equity lines of credit (HELOCs) and other second lien residential loans. The Top 10 originated $2.3 billion in the first quarter, up 23% from a year earlier.

First-quarter interest rates remained high, and have been a major factor in the continuing weakness in first mortgages.

The Top 10 originated $4.4 billion in residential first mortgages in the first quarter, down 12% from a year earlier and down 9% from the fourth quarter.

The NCUA does not report auto loan originations, but they again appear to be down.

They are a major part of the “other consumer” loan category, which also includes credit cards and personal loans. The Top 10 originated $17.6 billion in other consumer loans in the first quarter, down 15% from a year earlier and down 14% from the fourth quarter.

CU Times analyzes results for the 10 largest credit unions by assets each quarter to get an early look at trends. Smaller credit unions typically have lower ROA, but the changes are usually similar. The Top 10 in the fourth quarter represented 18% of assets and 20% of members for the credit union movement.

The first quarter brought some changes in the lineup. Suncoast Credit Union of Tampa, Fla. ($18.2 billion in assets, 1.2 million members as of March 31) returned at No. 10, pushing out Randolph-Brooks Federal Credit Union of San Antonio ($17.5 billion in assets, 1.1 million members as of March 31).

The change had an impact on fourth-quarter ROA. It was 0.47% with Randolph-Brooks at No. 10 and 0.39% with Suncoast at No. 10.

Within the group, SchoolsFirst Federal Credit Union of Santa Ana, Calif. ($30.6 billion, 1.4 million members) rose to No. 4, as BECU of Tukwila, Wash. ($30.2 billion, 1.5 million members) fell to No. 5.

Overall results for the Top 10 were:

1. Navy Federal Credit Union of Vienna, Va. ($178 billion, 13.6 million members) had ROA of 0.99% in the first quarter, compared with 1.32% a year earlier. Originations were $13.1 billion, up 2.8%.
2. State Employees’ Credit Union of Raleigh, N.C. ($55.9 billion, 2.8 million members) had ROA of 0.48% in the first quarter, compared with 1.13% a year earlier. Originations were $2.1 billion, down 11.6%.
3. Pentagon Federal Credit Union of Tysons, Va. ($34.4 billion, 2.9 million members) had ROA of 0.27% in the first quarter, compared with 0.37% a year earlier. Originations were $1.3 billion, down 33%.
4. SchoolsFirst Federal Credit Union had ROA of 0.4% in the first quarter, compared with 0.64% a year earlier. Originations were $1.4 billion, down 11.3%.
5. BECU had ROA of 0.59% in the first quarter, compared with 0.78% a year earlier. Originations were $1.5 billion, down 44.4%.
6. Golden 1 Credit Union of Sacramento, Calif. ($20.5 billion, 1.1 million members) had ROA of 0.58% in the first quarter, compared with 0.68% a year earlier. Originations were $1.2 billion, down 30.1%.
7. America First Federal Credit Union of Riverdale, Utah ($20.3 billion, 1.4 million members) had ROA of 1.05% in the first quarter, compared with 1.31% a year earlier. Originations were $1.5 billion, down 1.7%.
8. Alliant Credit Union of Chicago ($20.1 billion, 859,264 members) had ROA of 0.42% in the first quarter, compared with 0.35% a year earlier. Originations were $377.5 million, down 63.5%.
9. Mountain America Federal Credit Union of Salt Lake City ($19.3 billion, 1.2 million members) had ROA of 0.88% in the first quarter, compared with 1.4% a year earlier. Originations were $1.5 billion, up 5.3%.
10. Suncoast Credit Union had ROA of 0.87% in the first quarter, compared with 1.29% a year earlier. Originations were $716.8 million, down 27.2%.