Top 10 Earnings Continue to Rise – Overall

Earning improved for the second quarter in a row for the nation’s largest credit unions, despite higher delinquencies and loan-loss provisions.

The results diverged among the Top 10, which account for 19% of credit union assets and provide an early indicator of trends.

A CU Times analysis of NCUA second-quarter Call Reports filed in the past week showed Navy Federal of Virginia, Alliant of Chicago and BECU of the Seattle area had net income gains from both last year’s second quarter and this year’s first quarter. The other seven had a mix of often sharp declines with a few sprinkled weak gains.

Together, their reports also showed tightening liquidity, a worsening delinquency rate and weak auto lending.

Their loan-to-share ratio was 84.2%, up from 82.2% a year earlier and 82.5% on March 31. In the 12 months ending June 30, total loans rose 6.2% to $301.3 billion, while savings grew 3.6% to $357.6 billion.

The Top 10 held $74.0 billion in new and used car loans as of June 30, up 5.8% from a year earlier. It was much worse elsewhere. As of May 31, the America’s Credit Unions trade group estimated car loan portfolios for all credit unions had fallen 0.2% in the past 12 months to $500.3 billion.

The Top 10’s 60-day-plus delinquency rate was 1.35% as of June 30, up from 1.05% a year earlier and 1.33% on March 31. The trade group estimated a 0.84% delinquency rate for all credit unions as of May 31, up from 0.61% a year earlier.

The Top 10 had higher delinquency rates in part because they hold a disproportionately large amount of the movement’s credit card balances. Top 10 credit card balances rose 9.5% to $39.9 billion – nearly half the amount held by all credit unions.

The Top 10 credit unions earned $867.6 million in the three months that ended June 30, or an annualized 0.81% return on their average assets. ROA rose from 0.74% in the first quarter and a low of 0.39% in the fourth quarter. However, second-quarter ROA was still less than the 0.85% ROA of 2023’s second quarter.

The 7-basis-point gain in ROA from the first quarter to the second quarter came as non-employee operating expenses rose by 7 bps, and loan loss provisions rose by 11 bps. Those higher expenses were offset by a 20-bps improvement in non-fee operating income, 3-bps gain in net interest and 1 bps in lower employee pay and benefits.

The 4-bps drop in ROA from a year earlier included a 20-bps increase in provisions canceling out a 20-bps improvement in operating income. After that, overhead rose 7 bps, softened by a 3-bps improvement in net interest margins.

Total originations were $28.9 billion in the second quarter, down 12.3% from a year earlier and up 17.2% from the first quarter.

Originations of loans for cars, credit cards and other personal loans were $18.6 billion in the second quarter, down 17.3% from a year earlier and up 5.9% from the first quarter.

Residential first mortgage originations were $6.6 billion in the second quarter, down 9.6% from a year earlier and up 50% from the first quarter.

Originations of home equity lines of credit and other second liens on homes were $2.9 billion in the second quarter, up 30% from both a year earlier and the first quarter.

Commercial loan production was $758.8 million in the second quarter, down 15% from a year earlier and up 79% from the first quarter.

Overall results for the Top 10 were:

• Navy Federal Credit Union of Vienna, Va. ($177.7 billion, 13.8 million members) had ROA of 1.26% in the second quarter, up from 1.09% a year earlier and 0.99% in the first quarter. Originations were $15.2 billion, up 0.3% from a year earlier and up 16.3% from the first quarter.
• State Employees’ Credit Union of Raleigh, N.C. ($56.5 billion, 2.8 million members) had ROA of 0.17% in the second quarter, down sharply from 0.81% a year earlier and 0.48% in the first quarter. Originations were $2.4 billion, down 16% from a year earlier and up 14% from the first quarter.
• PenFed Credit Union of Tysons, Va. ($33.5 billion, 2.9 million members) had ROA of 0.26% in the second quarter, down from 0.36% a year earlier and 0.27% in the first quarter. Originations were $1.4 billion, down 43% from a year earlier and up 6.9% from the first quarter.
• SchoolsFirst Federal Credit Union of Santa Ana, Calif. ($30.9 billion, 1.4 million members) had ROA of 0.36% in the second quarter, down from 0.48% a year earlier and 0.40% in the first quarter. Originations were $1.6 billion, down 5.8% from a year earlier and up 13% from the first quarter.
• BECU of Tukwila, Wash. ($29.6 billion, 1.5 million members) had ROA of 0.82% in the second quarter, an improvement from 0.70% a year earlier and 0.59% in the first quarter. Originations were $1.8 billion, down 40% from a year earlier and up 20% from the first quarter.
• America First Federal Credit Union of Riverdale, Utah ($20.8 billion, 1.4 million members) had ROA of 0.94% in the second quarter, compared with 0.97% a year earlier and 1.05% in the first quarter. Originations were $1.6 billion, down 1.6% from a year earlier and up 5% from the first quarter.
• Alliant Credit Union of Chicago ($20.3 billion, 869,377 members) had ROA of 0.55% in the second quarter, up from 0.37% a year earlier and 0.42% in the first quarter. Originations were $896.3 million, down 32% from a year earlier and more than double the first quarter.
• Mountain America Federal Credit Union of Salt Lake City ($19.6 billion, 1.3 million members) had ROA of 0.86% in the second quarter, compared with 1.30% a year earlier and 0.88% in the first quarter. Originations were $1.8 billion, up 3.6% from a year earlier and up 19% from the first quarter.
• Golden 1 Credit Union of Sacramento, Calif. ($19.3 billion, 1.1 million members) had ROA of 0.53% in the second quarter, compared with 0.50% a year earlier and 0.58% in the first quarter. Originations were $1.5 billion, down 24% from a year earlier and up 25% from the first quarter.
• Suncoast Credit Union of Tampa, Fla. ($18.4 billion, 1.2 million members) had ROA of 0.61% in the second quarter, down from 0.90% a year earlier and 0.87% in the first quarter. Originations were $773.3 million, down 34% from a year earlier and up 7.9% from the first quarter.