Income, expenses on the rise
Federally insured credit unions seemed to get a boost from higher interest rates in their first-quarter results. Overall net income totaled $14.1 billion, up almost 12% from a year earlier, as interest income rose nearly 15%, to $58.3 billion. The aggregate net interest margin expanded by nearly 9%, to $46.1 billion.

Non-interest income rose by more than 2%, to $20.5 billion, as fee income remained relatively flat at $8.3 billion from a year earlier.

Non-interest expenses also rose, increasing by roughly 7%, to $46.2 billion, with additional labor expenses accounting for about half of the uptick.
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Membership grows as consolidation continues
Part of that boost in net income can be attributed to a continued increase in membership. Total membership nationwide stood at 117.3 million at the end of Q1, up 4.6 million members from one year prior, a 4% increase.

But those members belong to fewer institutions. There were 195 fewer credit unions in operation at the end of Q1 2019 than at the end of Q1 2018, dropping from 5,530 to 5,335, a 3.5% decline. That figure is on par with industry averages dating back to the 1980s. Broken down by charter, there were 3,350 federally chartered CUs and 1,985 state charters in operation at the end of the first quarter.

While the number of operating institutions declines, the number of credit unions with a low-income designation continues to rise, from 2,544 at the end of Q1 2018 to 2,571 at the end of Q1 2019.
The big get bigger while small CUs struggle
NCUA's data shows many credit unions appear to be doing a good job at converting new members into profitable members and expanding the relationship beyond just a checking or savings account, though credit unions below $500 million in assets fared much worse than their larger counterparts.

Total outstanding loans rose almost 8%, to $1 trillion, from a year earlier. The largest credit unions booked the biggest gains in their loan portfolios. Institutions with at least $1 billion in assets posted loan growth of about 11%, compared with a roughly 2% decline for credit unions with less than $10 million in assets.

Loan balances surged in all of the main categories, including mortgages, credit cards, commercial credits and auto loans, according to the NCUA. Student loans had the largest percentage jump, increasing by almost 17%.
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Deposits surge
Recent months have seen banks and credit unions competing fiercely for deposits, and NCUA's data revealed strong performance for the industry. Deposits and shares at federally insured CUs increased by 5.8% ($69.3 billion) to a total of $1.27 trillion at the end of Q1. Regular shares were up 3.9% to reach $462.6 billion, while other deposit types saw a 7.5% lift to hit $621 billion. Specifically, certificate accounts rose by 18% ($38.7 billion) while non-member deposits increased 17.7% ($1.8 billion).

The NCUA board approved a proposed rule to ease the process for CUs to add non-member deposits as part of its May 2019 board meeting.
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Assets, net worth continue to grow
The credit union industry held $1.51 trillion in assets at the end of the first quarter, an increase of $90 billion (6.3%) compared to one year prior. The industry’s net worth ratio rose by 8.8%, hitting $167.8 billion at the end of Q1, while aggregate net worth – net worth as a percentage of assets – rose from 10.89% at the end of Q1 2018 to 11.14% at the end of Q1 2019.

Return on average assets at federally insured CUs was also up slightly, hitting 95 basis points after standing at 90 basis points at the end of the first quarter last year. Median ROA across the industry was 56 basis points, an 8-point increase from the previous year.

Industry-wide, the loan-to-share ratio rose by just under 2 percentage points, from 80.8% at the end of Q1 2018 to 82.4% at the end of March 2019. The credit union system’s net worth ratio rose by 25 basis points, from 10.89% in March 2018 to 11.14% this year.