Credit Unions: What We Have Seen and What We Expect to See – Brian Sullivan, Partner, CPA

What we have seen in 2018:

+ Credit unions have seen a rise in profitability continue to stabilize in 2017 when compared to the prior year. Through the first six months of 2018, credit unions have maintained a return on assets of 0.90%, up 14 basis points from a year ago.

+ For the first half of 2018 the interest margins have begun to stabilize. Rates are beginning to rise. However, the need for credit unions to maintain their liquidity has caused deposit rates to rise faster than loan rates. The yield on loans has risen from 4.50% as of June 30, 2017 to 4.61% as of June 30, 2018. The cost of savings and borrowings has also risen from 0.60% to 0.70%. Credit unions continue to look for other sources of income.

+ The number of credit unions in the nation continue to decline but are still seeing steady growth in number of members, loans and total assets.

+ In the first half of 2018 the dollar amount of delinquent loans to loans has decreased to 0.67%, down 8 more basis points from a year ago.

What we expect to see in 2019:

+ Interest yields will continue to increase due to the anticipated Federal Reserve hike in short term interest rates.

+ Loans are expected to continue increasing as consumer spending rises in 2019. However, the increase may not be as fruitful as 2016 if interest rates do continue to rise.

+ More demand and affordability of mobile products.

+ More challenges related to cyber security and ID theft.

+ Technology advances will continue to change the member outlook on financial services.

+ Addition of more value-added services to better serve the needs of members in the changing technology driven environment.