Net interest margin is the spread between interest income and interest expense to average assets and is the result of the organization’s executing of its lending, investing, and liquidity strategies. Credit unions with higher expenses, loan losses, or lower non-interest income levels have to maintain higher net interest margins.
In the second quarter of 2013, the industry reported the net interest margin of 2.77%, down 19 basis points from the previous June at 2.96%. Due to persisting low interest rate environment, net interest margins have remained tight since the economic downturn. Average net interest margin has been below the operating expense ratio for the past couple of years. It means that the difference between interest income and interest expense alone hasn’t been sufficient to cover credit unions’ day-to-day-operations.
Alaska led the nation in net interest margin as of June 2013 with 3.53%. Wyoming and North Dakota both came in second with 3.23% in net interest margin in the same quarter.
LEADERS IN NET INTEREST MARGIN
Data as of June 30, 2013 for All Credit Unions in the U.S.
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Generated by Callahan & Associates' Peer-to-Peer Analytics