Wednesday, June 1, 2011

Credit Unions Post $1.7 Billion Profit in Q1 2011

NCUA reported that assets, shares (deposits), and profits were up at federally-insured credit unions during the first quarter of 2011, while loans fell.

Profits Up 63% on Lower Provisioning for Loan Losses

Net income for federally-insured credit unions was $1.7 billion during the first quarter of 2011, up almost 63 percent from the first quarter of 2010 profits of $1.2 billion. The return on average assets (ROA) at credit unions rose by 27 basis points to .74 percent in the first quarter of 2011 from a a year ago. In addition, ROA was up 23 basis points from the end of 2010.

The increase in credit union profits was mainly due to lower provisions for loan and lease losses, which fell from $1.86 billion at the end of the first quarter of 2010 to $1.218 billion at the end of the first quarter of 2011.

However, top line revenue growth was weak for credit unions. Net interest income before provisioning for loan and lease losses was relatively flat posting a year over year increase of $105 million. As a result, the net interest margin for credit unions fell by 8 basis points over the last year to 3.16 percent.

Non-interest expenses were up 4 percent from a year ago to $7.26 billion, while non-interest income was up 7 percent largely due to other operating income. But fee income was virtually flat -- slipping by 1.1 percent to nearly $1.63 billion.

Assets and Shares Up, Loans Down

Credit union total assets stood at $939 billion on March 31, a jump of nearly $25 billion (or 2.72 percent) during the quarter. Credit union shares (deposits) expanded, growing 3.21 percent in the first quarter to $811.7 billion from $786.4 billion.

However, loans fell for the second quarter in a row. Outstanding loan balances were $564.8 billion at the end of 2010 and fell to $560.0 billion at the end of the first quarter of 2011. Only two loan categories posted an increase during the quarter, 1st mortgages and lease receivables.

Credit unions reported granting $57.5 billion in loans during the first quarter of this year; but is below the $68.8 billion granted during the fourth quarter of 2010.

Net Worth Increases, But Ratio Falls

Net worth increased 1.77 percent last quarter to $93.6 billion from $92.0 billion. However, assets grew more rapidly than net worth, which caused the net worth ratio to drop 10 basis points from the prior quarter to 9.96 percent.

Asset Quality Improves

Credit unions reported an improvement in asset quality. At the end of the first quarter, less than $9.1 billion in loans were 60 days or more delinquent. This is down $919 million from one year ago and $810 million from the fourth quarter of 2010.

NCUA reported that 1.62 percent of total loans were 60 days or more delinquent, a 13 basis point improvement from the prior quarter. In addition, the ratio of net chargeoffs to average loans declined to 1.0 percent in the first quarter, a drop of 13 basis points from the 2010 year-end level.

Modified loans were $12.4 billion -- up 6.4 percent from the previous quarter and 44 percent from a year ago.

Credit unions continue to report an increase in foreclosed repossessed assets. Foreclosed and repossessed assets stood at $1.9 billion -- an increase of 2.4 percent from the previous quarter and almost 19 percent higher than a year ago.

Read NCUA's press release.


  1. Credit Unions are NOT FOR PROFIT

  2. You can call it retained earnings or net income, it is still profits by any other name.

    Moreover if a credit union did not make a profit, it would not be in business for very long.

  3. Sounds like someone needs a course in credit union philosophy. The "profit" you talk about is not distributed to a select few, it is paid back to the owners (members) in the form of new services, bonus dividneds and lower loan rates, etc. The directors are not paid for their services, they are volunteer.

  4. While FCUs cannot compensate directors monetarily, there are some state chartered credit unions that pay their directors. I suggest that you pull up the Form 990s for some of the large state chartered credit unions. Navigant CU's directors received compensation ranging from $9,000 to $32,000 in 2009. Trumark Financial CU paid its directors between $13,928 and $60,615 in 2009.

  5. Did you know that I was told that United Community Credit could take money out of my checking account without any authorization from me or my husband? This was for one of their Master Cards. A few times we went in to this credit union to see about making a payment, they said they can't except payments, that we have to make them directly to Yes we have fallen behind. Also just a few weeks before they took this money out of our checking account I spoke to a gentlemen from collections at no point and time did he ever mention to me that they could do this as a way of collecting a debt.
    Shouldn't this have been disclosed to us at the time we took out the credit card? I have since looked at the application and no where on there and not even in the small print does it state that they have this type of authority. As far as I'm concerned, that is stealing and I am filing a complaint against them.



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