The net results have been about average: BECU generated $50.9 million in net income in the first quarter, or an annualized 0.69% return on average assets, compared with 0.59% ROA a year earlier. Originations were $1.4 billion, down 6.7%.

That compared with 0.67% ROA for all credit unions in the first quarter, up from 0.66% a year earlier.

Drew Wolff, BECU’s CFO, told CU Times that even with slower loan growth, the credit union’s earnings have improved because of a better mix.
One ingredient is residential loans, with both first mortgages and second liens rising at about the same rate.

The number of BECU mortgages is increasing at a much slower rate than balances, which he said reflects the Seattle area’s fast-rising home prices.

“It’s a jumbo loan market, and most of our production has been purchases for the last year,” he said.

Like many large metro areas, Seattle has a shortage of houses. But it also has plenty demand from buyers working for big employers like Amazon and Microsoft.

BECU’s residential loan balance was $10.4 billion on March 31, up 11.4% from a year earlier, far outperforming its portfolio’s average gain of 4.7%.

The laggard has been auto lending, where the balance fell 10.4% to $3.1 billion March 31.

BECU is one of the three largest auto lenders in the Pacific Northwest, mostly through indirect lending. However, prevailing rates are tending to fall below what passes muster for BECU standards.

“We’re not going to do illogical pricing,” Wolff said. “That’s what we see in the market right now. We’re pricing well, but we’re not chasing volume.”

But the slow gain in the portfolio combined with higher margins on the mix, has allowed better returns.

Like many credit unions, BECU’s net interest margins have risen. It was 3.53% for the first quarter, up from 3.28% a year earlier.

“We were coming off this era of very low rates and we’re remixing in mortgages at higher rates. And we have a very loyal, sticky community-based deposit portfolio. And that enabled us to expand our margin last year,” he said.

At the same time, BECU has been lowering its dependence on fees for the past five years or so. Wolff said fees are now about 15% of revenues, down from about 30% in the pre-pandemic years.

“Our fee income is basically debit card interchange, and then a lot of just pass-through service fees,” he said.

Wolff and others at BECU have been closely watching developments with tariffs. About half of Washington state’s economy is linked to trade.

“It is a highly uncertain time right now,” Wolff said. “Everybody’s a little bit frozen and waiting to see what’s going to happen in this uncertainty.”

But Wolff said BECU remains optimistic. It’s still investing in technology and expanding its branch footprint, “especially in places where banks typically haven’t gone.”

“Even in a difficult economy, we see good returns and I think we’ll keep doing it and we’ve got the capital and the posture to keep doing it,” he said.

He noted the credit union’s net worth ratio is near 12%, and it paid down debt heavily in 2024.

“We’re in a strong financial position,” he said. “We strive to have a boring quarter and be pretty conservatively managed.”

Contact Jim DuPlessis at [email protected].