First Quarter Data Documents Turn Around, Even with So-Called “Problem” Credit Unions

Credit unions are turning out a collective performance that shows industry success is not skewed by high-achieving outliers.


The improvements in the credit union system reflect more than mere industry averages. Macro industry indicators show significantly stronger total performance in areas such as:

  • Widening net interest margin
  • Lower operating expenses
  • Positive ROA and rising core earnings
  • Higher net worth to assets ratio

But the data is even more positive when looking at the lower end of the performance continuum. For example:

  • At the end of first quarter 2010, 15% more credit unions are showing positive net income than at year-end 2009, just 90 days earlier. (slide 1)
  • The percentage of credit unions that have a net worth below 7% is unchanged from one year ago, while the percentage of credit union assets held by well-capitalized credit unions has increased from 86.8% to 90.8% in just one year. (slide 2 & 3)  
  • The total capital ratio of credit unions with a net worth below well-capitalized is at 7.7%. (slide 4)
  • The coverage ratio for at-risk credit unions has risen steadily over the past year. (slide 5)
  • The core earnings of this same group of “at risk” credit unions is also increasing significantly. (slide 6)

Additionally, the delinquency ratios for all credit unions have declined in 40 states. (slide 7)
This is the largest number of positive changes in the past year.

“The data is undeniable,” says Jay Johnson, Executive Vice President of Callahan & Associates. “The system’s financial health is improving at both the strong and the weaker ends of the performance spectrum.

With economic recovery continuing, the co-operative model is well-positioned to help members participate in this positive set of changes. For a few "best of" case studies on how individual credit unions are positioning themselves for success in 2010, check out: Members 1st Powers through the Great Recession, Arrowhead Flies Straight in 2010, and North Island is Back in Black, then watch Callahan & Associate's 1Q10 Trendwatch call to learn more about overall industry performance.