The nation's 10 largest credit unions' net profits in the first quarter were their best in more than three years.
A CU Times analysis found the continued growth of net interest income and a sharp drop and loan loss provisions overcame a drop in non-interest income and record high employee costs.
CU Times analyzed NCUA data drawn from Callahan's Peer Suite. As of early Monday, Callahan had processed 4,235 Call Reports representing an estimated 98% of total credit union assets.
CU Times analyzes the Top 10 because they represent nearly 20% of the movement's assets. Their results tend to be better than those of other credit unions, but the trends track closely.
The Top 10 earned $1.29 billion in the three months ending March 31, or a return of 1.11% of their $463.5 billion in average assets. That was up from ROA of 0.82% a year earlier and 0.79% in the fourth quarter. It's also the group's highest ROA since 1.22% in the fourth quarter of 2022.
The Top 10's 1.11% ROA for the first quarter compared with 0.80% for the other 4,225 credit unions whose Call Reports had been processed by Callahan as of Monday morning. ROA for the entire 4,235-credit union sample was 0.86%, with the inclusion of the Top 10.
For the Top 10, the biggest component in improving profits was net interest income, which was 4.08% of average assets in the first quarter, up from 3.87% a year earlier and 4.06% in the fourth quarter.
Besides the unusually high net interest margins, the credit unions also benefited from relatively low loan loss provisions.
The CECL credit loss expense was just over $1 billion for the first quarter, or 0.90% of average assets, down from 1.08% a year earlier and 1.25% in the fourth quarter.
However, fees and other non-interest income have been falling. Non-interest income was 0.89% of average assets in the first quarter, down from 0.99% a year earlier and in the fourth quarter.
Overhead rose from a year earlier but fell from the fourth quarter, while employee pay and benefits has been rising steadily. Non-interest expenses were 2.96% of average assets in the first quarter, up from 2.92% a year earlier and down from 3.01% in the fourth quarter.
Measuring originations from the first quarter of 2025 to the first quarter of 2026, the biggest gain was first mortgages, which rose 47% to $8.2 billion. HELOCs and other second liens rose 40% to $4.0 billion, and commercial loans rose 28% to $666 million.
The rest were consumer loans, including credit cards, personal loans and auto loans. Originations of these loans rose 3% to $20.2 billion.
Although they accounted for 63% of originations, they accounted for only 19% of the 12-month growth in dollars.
The Top 10 have a greater proportion of credit cards than the rest of the movement, so their delinquency and charge-off rates tend to be higher. The key is the movement, not necessarily the ratio itself.
And the movement in loan quality was mixed. The Top 10's net charge-off ratio was 1.62% in the first quarter, down from 1.67% a year earlier and 1.66% in the fourth quarter. Their 60-day-plus delinquency rate was 1.25% March 31, up from 1.20% a year earlier and down from 1.64% on Dec. 31.
Contact Jim DuPlessis at Jim.DuPlessis@arc-network.com.
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