Key Risks Facing Credit Unions In 2019



Credit unions and banks alike posted record profits in 2018, with much of the performance driven by widening net interest margins (NIMs) and tax cuts for banks. While lagging performance and risk metrics remain strong, credit unions need to be wary of complacency in 2019.

Industry Performance

As the most recently available data show, the U.S. depository system experienced growth in profitability towards the end of 2018, benefitting from widening net interest margins and declining provisions for loan losses relative to average assets. Third quarter average credit union ROA jumped to 1.02%, up from 0.81% one year ago; ROE jumped to 9.52%. Both ROA and ROE for the industry were at the highest levels in over ten years. Total net income grew 33% over the year, posting $3.69 billion—the highest ever. Net interest income and operating revenue saw notable increases, as both increased 11% from the year earlier.



Balance sheet growth continued, as credit union total assets surpassed $1.45 trillion, although deposit growth for the quarter was negligible. Loan growth, on the other hand, experienced strong growth; average loan portfolios increased about 3%, pushing the industry’s loan-to-deposit ratio to 84.83%, up from 82.89% in mid-2018 and 81.34% one year ago.

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