Credit Unions Boast Stronger Earnings

Net income soared 20% from the first quarter of 2011 as loan losses declined, according to first quarter 2012 data.


Credit unions improved their earnings in the first quarter of 2012 as ROA continued to climb after rebounding from declines during the recession.

The credit union industry posted an annualized year-to-date ROA of 83 basis points as of March 31, up 10 basis points from the first quarter of 2011. Additionally, post-stabilization ROA was 88 basis points, up 7 basis points from the first quarter of 2011.

Net income grew more than 20% from the first quarter of 2011, primarily through a continuing decline in provisions for loan losses as well as lower cost of funds. Provisions for loan losses declined 20.7%, accounting for the second largest portion of the gain in net income, behind only decreased dividends.

Annualized Year-To-Date ROA
For all U.S. Credit Unions | Data as of March 31, 2012
Callahan & Associates' Annualized Year-To-Date ROA
Source: Callahan & Associates' Peer-to-Peer Software.

Total revenue was flat annually, as non-interest income made up for the losses in loan and investment interest income caused the by the sustained low-rate environment. Non-interest income increased 13.2% annually to reach $3.3 billion for the first three months of 2012, as fee income increased 5.4%. Other operating income, which includes interchange and gains from mortgage sales to the secondary market as well as other sources of income, increased 23.6%.

Loan interest income declined 3.3%. Operating expenses increased in the first quarter, up 5.4%. The primary driver behind the increase is salary and benefits and higher spending on office operations.

Credit unions’ gains were reflected in states across the country. Arizona credit unions posted the highest ROA in the first quarter and posted the biggest year-over-year change. Despite being hit hard by the housing crisis, credit unions in Arizona improved their ROA 56 basis points from the first quarter of 2011 to reach 1.23% at the end of March 2012.

Credit unions in Nevada, which also saw a steep decline in home prices, also had one of the biggest annual changes in return on assets. They improved ROA by 28 basis points. Rounding out the top five states in ROA in the first quarter were: Virginia (1.21%); Iowa (1.12%); North Dakota (1.09%); and Alaska (1.06%).

Momentum for credit unions was strong at the beginning of the year. They reported the highest level of loan originations ever in a first quarter and continued member growth from anti-bank sentiment among other highlights of strong performance.

Credit unions should continue to capitalize on this momentum by building deeper member relationships. This will cause earnings to further strengthen and allow credit unions more flexibility in future growth plans and the ability to return even stronger value to members.




June 11, 2012


  • Right now a big portion of earnings is coming from CUs reversing ALL. Once that pool is exhausted, where will earnings come from? The loan to share ratio accross the industry implies that CUs are underinvested in core assets and vulnerable to hits to their ROA.
    Bill Dodson