Revenue topped $25.3 billion in the second quarter of 2014. That’s a 1.2% year-over-year increase for the more than 6,400 credit unions reporting second quarter data for Callahan’s FirstLook program. This marks the first time since June 2009 that total revenue has increased year-over-year.
Data as of June 30, 2014, for all FirstLook credit unions in the United States
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Source: Peer-to-Peer Analytics by Callahan & Associates
The 4.0% annual growth in total interest income offset the 4.7% decline in total non-interest income through June. Loan income alone is up 3.3% over the past 12 months and hit $15.9 billion in the second quarter. Consequently, the net interest margin increased five basis points to 2.82%. Higher interest rates also contributed to a 9.5% increase in investment income over the past year; it hit $2.2 billion in June 2014.
Conversely, non-interest income is lower in the first half of 2014 versus 2013. Fee and other operating income are down 3.2% and 5.6%, respectively. Reduced income from mortgage sales to the secondary market and a cooling of the refinancing market have both contributed to the decline in other operating income. During the second quarter of 2014, credit unions sold $13.2 billion in mortgages to the secondary market; that’s down 61.7% from one year ago.
Return on assets was 0.81% at the end of June 2014. That’s four basis points lower than second quarter 2013 but three basis points higher than first quarter 2014. The net worth ratio increased 30 basis points annually to 10.8% as of June 2014. This indicates credit unions are generating sufficient earnings to build capital base.
One credit union that exemplifies the national trend is Citizens Federal Credit Union ($119.4M, Big Spring, TX). Its 94% annual growth in interest income easily offset a 12.1% decrease in non-interest income. Ultimately, it posted a 43.8% increase in total income in the second quarter of 2014.