Net Income at FICUs Fell by 40 Percent Compared to a Year Ago

Net income at federally insured credit unions (FICUs) fell by 40 percent at the end of the first quarter of 2020 compared to a year ago, according to the National Credit Union Administration.

Net income was $2.1 billion as of March 31, 2020. In comparison, net income was $3.5 billion as of March 2019.

The decline in net income was partially due to an increase in provisions for loan and lease losses. Provisions for loan and lease losses were $2.13 billion at the end of the first quarter of 2020, up from $1.6 billion at the end of the first quarter of 2019.

The return on average assets was 0.53 percent as of March 2020, down from 0.95 percent from a year earlier and 0.93 percent at the end of 2019. The median return on average assets was 0.41 percent as of March 2020, down 14 basis from the first quarter of 2019 and 19 basis points at the end of 2019.

Net interest margins at FICUs fell 16 basis points from a year ago to 2.95 percent as of the first quarter of 2020.

As of March 2020, provisions for loan and lease losses as a percent of average assets were up 10 basis points from a year ago to 0.53 percent.

Assets and Shares Post Solid Growth During First Quarter

Assets at FICUs increased by 4.6 percent during the first quarter of 2020 to $1.64 trillion.

Total shares and deposits were up 4.3 percent during the first quarter, while loans grew by just 0.8 percent over the same time period.

FICUs reported a decline in new car, credit card, and payday alternative loans during the first quarter of 2020. First mortgages, used car, and commercial loans grew during the quarter.

As a result of shares growing faster than loans, the loan to shares ratio fell from 83.95 percent as of December 2019 to 81.14 percent as of March 2020.

Most FICUs Are Well-Capitalized

Net worth at FICUs grew by 1.2 percent during the first quarter of 2020 to $180.4 billion. However, the net worth ratio fell by 36 basis points during the first quarter of 2020 to 11.01 percent. One year earlier, the net worth ratio was 11.13 percent.

Slightly more than 98 percent of FICUs had net worth ratio of at least 7 percent as of March 2020 -- the minimum requirement for being well capitalized. Three credit unions had negative net worth ratios as of March 2020.

Delinquent Loans Fell During Q1 2020

FICUs reported $7.1 billion in delinquent loans as of March 2020 -- this is down from $7.8 billion at the end of 2019. The delinquency rate fell 7 basis points during the first quarter of 2020 to 0.63 percent.

Net charge-offs were $1.6 billion as of March 2020, up from $1.5 billion from a year earlier. The net charge-off rate rose by 1 basis point from a year ago to 0.58 percent as of March 2020.

Allowance for loan and lease losses was $10.1 billion at the end of March 2020, up from $9.2 billion a year earlier. The industry's coverage ratio was 142.16 percent as of March 2020.

At the end of March 2020, 168 credit unions had a CAMEL Composite rating of 4 and 4 credit unions had a CAMEL Composite rating of 5.

At the end of March 2020, there were 5,195 FICUs, down from 5,236 FICUs at the end of 2019.

Read the quarterly data summary.