Deposits up, earnings down: 8 takeaways from NCUA's Q1 state-level data

July 10, 2020 5:00 AM

Fewer credit unions turned a profit during the first quarter than a year ago, according to new data from the National Credit Union Administration.

The agency on Thursday released its latest Quarterly Map Review. The report examines median data for the year ending in the first quarter compared with the same period for 2019.

The coronavirus began spreading widely in March, near the end of the first quarter. Measures meant to slow the pace of the outbreak, including closing nonessential businesses and issuing stay-at-home orders, have contributed to widespread economic fallout.

The data showed that across the board, the industry suffered in key areas, such as earnings and return on assets. In addition to that, credit unions in some states struggled while institutions in different geographic areas fared better.

Read on for highlights from NCUA’s report. A look at first-quarter 2019 results can be found here, while a look at national trends so far this year is available here.

CUJ 070920 - NCUA Q1 2020 positive net income.JPG

Passman, Aaron

Earnings take a tumble

The number of credit unions earning a profit dropped by 6 points year over year, to 80%, at the end of March. That figure stood at 83% at the end of the first quarter of 2018.

At least 60% of all CUs nationwide reported positive net income, and 93% of institutions in Maine, New Mexico and Oregon earned money, along with 92% in Wyoming.

Just 63% of credit unions in Arizona were profitable, followed by Rhode Island and Vermont at 68%. The Vermont figure represents a significant drop compared to the first quarter of 2019, when all credit unions in the Granite State reported positive net income.

CUJ 070920 - NCUA Q1 2020 median ROA.JPG

Passman, Aaron

ROA falls

Median return on assets at federally insured credit unions dropped by 15 basis points over the year to reach 41 points at the end of March. That figure is below where ROA stood two years ago, when it was at 48 basis points at the close of the first quarter of 2018.

At 69 basis points, Oregon once again led the nation with the highest median ROA, but that figure represents a 17-point decline from one year prior. Idaho and Utah followed closely behind, both reporting median ROA of 66 basis points.

ROA was lowest in Nebraska (23 points) followed by Connecticut, Delaware and Rhode Island, which all reported ROA of 28 basis points. Connecticut had the lowest median return in March 2019 (35 basis points).

CUJ 070920 - NCUA Q1 2020 median loan growth.JPG

Passman, Aaron

Loan growth plunges

The median growth rate for loans outstanding totaled 2% for the year ending in the first quarter. That’s down significantly from the 5.8% increase posted a year earlier for the same period.

Credit unions in 44 states and Washington, D.C., posted a boost in their loans, led by Idaho at 6.1%. Minnesota and Wyoming both had a median growth rate of 5.6%.

The smallest median increases in loans were recorded at Pennsylvania and Washington, D.C., credit unions at 0.2% and North Carolina at 0.3%.

New Jersey had the biggest median decline in loans at 2%, followed by a 1.4% drop for institutions in Nebraska.

Membership ticks down

More than half of all federally insured credit unions lost members in the year ending in March, though those declines were generally seen at smaller institutions. Roughly 70% of those credit unions that reported fewer members have less than $50 million in assets. About 56% of the industry falls into that asset category.

As of March 31, median membership had fallen by 0.1%, according to NCUA data. That’s compared with credit unions increasing members by 0.2% for the year that ended in the first quarter of 2019.

At 2% growth, Idaho credit unions had the largest median gain in membership, followed by Alaska at 1.9%.

Credit unions in 23 states and Washington, D.C., recorded declines in membership. New Jersey had the steepest drop at 1.8%, followed by a decrease of 1.2% for Pennsylvania credit unions.

Montana, Texas and North Carolina recorded no change.

Delinquencies rising, but slowly

The nation’s median delinquency rate rose by 5 basis points year-over-year to reach 59 points. That figure, however, is still an improvement compared to the end of 2018, when the median delinquency rate stood at 69 basis points.

New Jersey continues to have the nation’s highest delinquency rate, at 177 basis points, followed by Louisiana, at 105 points.

New Hampshire and Oregon had the lowest delinquency rates, at 25 and 32 basis points, respectively.

Asset growth surges

For the year ending in the first quarter, median asset growth was 3% nationally, according to data from NCUA. That’s almost double the 1.6% median growth for the year that ended in the first quarter of 2019.

Credit unions in Maine posted the biggest gains at 8.3%, followed by Idaho at 7%.

New Jersey credit unions posted a median decline in assets of 0.2%. Arkansas institutions gained just 0.6% in assets followed by Washington, D.C., at 0.9%.

Institutions flooded with deposits

Growth in shares and deposits for the year ending in the first quarter was almost triple the gains posted for the same period a year earlier. Nationwide the median growth in this area was 2.9%, up from 1.1% from the same period in 2019.

Once again, credit unions in Maine reported the largest growth with a median rate of 7.9%. Alaska was second with a median gain of 7.3%

Institutions in New Jersey struggled to pick up shares and deposits. That state posted a median loss of 0.8% in this area. Washington, D.C., credit unions gained just 0.3%, followed by Arkansas and Louisiana, which both increased shares and deposits at a median rate of 0.4%.

Loan-to-share ratio stays level

The media loan-to-share ratio remained at 68% at the end of March, unchanged from one year earlier.

Vermont and Idaho reported the highest median ratios, at 87% and 86%, respectively.

Delaware and New Jersey, at 49%, posted the lowest medians, followed by Hawaii at 51%. Delaware, New Jersey and Hawaii were in similar positions at the end of the first quarter in 2019.