Three Trends At Year-End 2010

Credit unions finished 2010 focused on three areas: asset quality, loan volume, and earnings.


Year-end results for 2010 are strong in today’s recovering marketplace. Encompassing nearly 95% of the industry (by both number and asset base), Callahan & Associates’ FirstLook program offers insight into three key trends.

1. Asset Quality

FirstLook credit unions report steady asset quality. The delinquency ratio remains unchanged — 1.74% — from September to December, and net charge-offs increased only 1 basis point from September. Since December 2009, when the delinquency ratio reached its peak of 1.81%, the metric has decreased seven basis points. More than half — 56.0% — of FirstLook credit unions report an annual decrease in delinquent loans. Industry delinquency traditionally peaks in the fourth quarter, so although delinquency is stable, it is a sign of continuing improvement in local markets.


Year-End 2010 FirstLook Asset Quality

Source: Callahan's Peer-to-Peer

2. Loan Originations

During the first quarter of 2010, credit unions posted the lowest first quarter originations in recent memory. Despite the year’s sluggish beginning, credit unions reversed course and ended up having a strong year. FirstLook credit unions originated $66.8 billion in the fourth quarter, ending the year at $242 billion. Annually this is slower than 2009’s record $261 billion but on pace with 2007 and 2008 ($239.1 and $240.6 billion, respectively.) Although 2009 was a strong year, fourth quarter 2010 originations picked up 13.4% over fourth quarter 2009 originations

Year-End 2010 FirstLook Originations

Source: Callahan's Peer-to-Peer

3. Earnings

The standard metric of industry profitability, Return on Average Assets, is improving. The industry reached 0.52% for 2010, the highest ROA since third quarter 2008. Despite a record-low interest rate environment, credit unions improved bottom lines throughout the year by reducing interest expense by 25.7% (thanks to the low rate environment) and by decreasing provisions for loan losses by 24.5%. With these improvements, credit unions overcame decreases in interest (3.8%) and non-interest income (13.1%). 

Operating expenses technically increased 10.7%; however this is largely because of the reporting change required by the NCUA. Previously, stabilization expenses, including NCUSIF premiums and TCCUSF expenses, were reported exclusive of operating expenses. Currently, they are both included in the Member Insurance line item. In 2010 credit unions recorded $866.3 million in NCUSIF premiums and $965.7 million in corporate credit union stabilization fund assessments. Excluding these expenditures, operating expenses increased 3.6% from December 2009 for FirstLook credit unions.

Year-End 2010 FirstLook ROA

Source: Callahan's Peer-to-Peer




Feb. 7, 2011


  • Thanks,

    I provide this and like materials to my staff and board in reports.
    ken filipovich