Credit unions maintain strong net income in 2017, posting increase of 9.2%

Credit union performance improved marginally in 2017 over the previous year, but nonetheless showed continued, consistent positive net income and net worth, year-end numbers from the federal credit union regulator showed Monday.

Year-end (and fourth quarter-end) 2017 data released by the National Credit Union Administration (NCUA) showed federally insured credit unions posted net income up 9.2% from the previous year (up $0.9 billion from the previous year – as NCUA stated it – for a total of $10.4 billion at an “annualized rate”).

The credit union net income reported by NCUA stands in stark contrast to that posted by the nation’s banks and savings associations in 2017. Net income at banks at year-end 2017 was down 3.5% (or $6 billion) from 2016, according to numbers released last week by the Federal Deposit Insurance Corp. (FDIC).

The FDIC, in releasing the numbers last week, said the net income decline for banks was primarily due to one-time income tax effects from the new federal tax law (passed by Congress late last year), including the revaluation of deferred tax assets and repatriation of income from foreign subsidiaries.

Credit unions are not subject to federal income tax.

Credit unions also posted a continued, strong net worth ratio; according to NCUA, the ratio was 10.96% for the end of last year, up slightly from the 10.89% posted a year earlier.

The credit union return was driven by interest income, according to the agency’s numbers. Interest income rose $4.9 billion, or 11.5%, over the year to $47.5 billion; non-interest income increased $0.7 billion, or 4.2%, to $18.1 billion.

The credit union regulator reported that the return on average assets for federally insured credit unions was 78 basis points (bp) at year-end, up slightly from 76 bp at the end of the previous year.

Assets at federally insured credit unions, NCUA said, rose by $86 billion, or 6.7%, over the year ending in the fourth quarter of 2017, to $1.38 trillion. Savings (shares and deposits) rose by $66.9 billion, or 6.1% (for a total $1.16 trillion) during 2017, NCUA said. Loans outstanding increased $88 billion, or 10.1%, over the year to $957.3 billion, NCUA said – adding that loan balances rose over the year in every major category, compared with the fourth quarter of 2016.

At the year’s end, NCUA said, there were 5,573 federally insured credit unions, down from 5,785 in the fourth quarter of 2016. Those credit unions counted 111.3 million memberships, up 4.5 million from the year before.

NCUA Releases Q4 2017 Credit Union System Performance Data