CU Earnings Up Despite Loan Slowdown, Preliminary Data Show

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WASHINGTON-Despite a slowdown in overall loan growth, credit union earnings are up in 2010 according to Callahan & Associates Q1 FirstLook data.

In a report, Senior Industry Analyst Nick Connors noted "strong, balanced growth" in earnings, share balances, and membership totals. Credit unions also saw a very strong ROA trend reversal as annualized YTD ROA improved from -1.49% in March 2009 to 0.47% this year.

Though the improvement is somewhat distorted by last year's NCUSIF assessment, Connors pointed out to Credit Union Journal that even with that expense factored out, earnings still rose and ROA improved by nearly 0.5%.

Credit unions continued to see strong share growth, though the rate has slowed somewhat since last year; CUs have seen 7.6% share growth in Q1 2010 compared to about 9.3% last year. Member growth is also slowing slightly, from 2.98% Q1 2009 to 2.25% this year.

Though auto lending has actually declined this year, it sits at $169 billion versus almost $174 billion in Q1 2009, Connors called the last 18 months "great" as CUs have significantly improved marketshare.

"I think capitalizing on that success is definitely going to be an area to build on [in 2010]," he said.

Investment growth continued to improve by double digits, net interest margins climbed slightly and operating expense growth declined by a full percentage point, allowing CUs to offset increased delinquencies. The delinquency ratio rose to 1.76% in Q1 2010, versus 1.4% last year, but net worth climbed to 9.87%, up from 9.73% this time last year.

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