Credit union earnings fared OK in the first quarter — just about as well as a year earlier and sharply better than the fourth quarter as a dip in loan loss provision masked a drop in revenue.

NCUA data pulled from Callahan's Peer Suite showed credit unions earned $3.9 billion in the first quarter, or an annualized 0.67% return on their average assets. It was up a smidge from 0.66% a year earlier and 0.44% in the fourth quarter.

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From the fourth quarter to the first quarter, ROA got an 18 basis point boost from lower loss expectations. The remaining 5 bps of the boost was mainly explained by falling fees being surpassed by higher net interest income and lower non-employee overhead.

For the year, a 23 basis-point improvement in net interest income was canceled out by worsening operating income and expenses. The 1 basis point drop in ROA was matched by the 1 bps drop in loss expectations.

Total loan originations in the first quarter were $137.7 billion, up 21% from a year earlier. Like the Top 10, the fastest growth was for home and commercial loans, with loan production lagging for auto and other consumer loans. Originations by segment were:

  • Auto and other consumer loans, which grew 15% to $84.7 billion.
  • First-lien resident mortgage originations, which grew 20% to $16.1 billion.
  • HELOCs and other second-lien residential loans, which grew 33% to $26.0 billion.
  • Commercial loans, which grew 49% to $10.8 billion.

The Federal Reserve’s G-19 Consumer Credit Report released Wednesday indicated credit unions held their own from the fourth quarter to the first quarter in their share of auto loans, but their share is still lower than a year earlier.

Every three months the G-19 includes the value of motor vehicle loans in the United States. Wednesday’s report showed all lenders held $1.56 trillion in car loans on March 31, up 0.3% from a year earlier. The balance fell 0.6% from three months earlier, compared with an average gain of 0.7% from Dec. 31 to March 31 over the previous 10 years.

The NCUA data showed credit unions held $483.5 billion in new and used car loans March 31, down 2.7% from a year earlier and down 0.3% from December. The credit union auto loan balance was 31% of the G-19 total for March. The share was unchanged from December and down from about 32% a year earlier.

Loan quality was generally in the OK range.

All credit unions had charged off $3.4 billion in loans in the first quarter, or an annualized 0.82% of average loans, up from their net charge-off ratio of 0.80% in last year's first quarter and up from 0.79% in the fourth quarter.

Delinquencies have subsided. The 60-day-plus delinquency rate was 0.73%, down from 0.77% a year earlier and 0.97% on Dec. 31.

Contact Jim DuPlessis at [email protected].

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Jim DuPlessis

Jim covers economic data trends emerging for credit unions, as well as branch news and dividends.