CHARLOTTESVILLE, Va.–A new report suggests that credit union profitability metrics “have weakened even as loan growth was strong” during the third quarter.
Credit unions in New Jersey performed most poorly overall, while those in Vermont performed best.
According to research conducted by SNL + S&P Capital IQ, return on average assets declined -0.05%), return on average equity was down-0.55%), and net income declined (-5.57%). Net interest margin, however, was actually up five basis points to 2.88%.
“Many of the profitability metrics deteriorated in the third quarter,” said SNL in its analysis. “Net income was $2.28 billion, representing a 5.57% decrease from the prior quarter.”
Other findings as of Q3:
- Overall loan growth was up 3.27%, the 18th consecutive quarter of growth, for an aggregate total of $778.73 billion
- New vehicle loans drive increased lending volume: All areas (close-end first liens, used vehicles, new vehicles, and unsecured) increased except for junior property liens. New vehicle was the real powerhouse, up 56.13%.
- Closed-end first liens on one- to four-family properties have increased $72.95 billion during the last three years, and remain the largest loan category, composing 41.10% of total loans. New-vehicle loans have been growing faster than all other categories, up 56.13% since the third quarter of 2012 to $97.64 billion. In the same period, used-vehicle loans increased 39.18%. The only category that showed a three-year decrease was junior property liens, down 2.61%, SNL said.
SNL calculated the median ROAA for credit unions based in each U.S. state and territory. The credit unions in New Jersey reported the lowest ROAA across the U.S., at 0.14%. Of the 183 credit unions headquartered in New Jersey, more than 32% bled red ink in the third quarter.
By contrast, only four of the 21 credit unions in Vermont, the state with the highest profitability, reported negative ROAA.