Federally Insured CU Net Income Drops 10.1% -- FDIC-Insured Banks Net Income, Up 11%

 Credit Unions Income Down

ALEXANDRIA, Va.— Even with assets growing, net income ($15.7 billion) at federally insured credit unions was down $1.8 billion, or 10.1%, in the first half of 2024, compared with the first half of 2023, NCUA’s Quarterly Credit Union Data Summary shows.

During a call with the press, NCUA Chairman Todd Harper attributed some of the decline to CUs increasing loan loss reserves.

Todd Harper

NCUA’s data also show the delinquency rate at federally insured credit unions was 84 basis points in the second quarter of 2024, up 21 basis points from one year earlier. The net charge-off ratio was 79 basis points, up 26 basis points compared with the second quarter of 2023. Insured shares and deposits rose $36 billion, or 2.1%, over the year ending in the second quarter of 2024, to $1.76 trillion.

Harper acknowledged the net income drop is “concerning.”

“However, some of it is the result of greater reserving for losses, which has decreased income,” Harper said. “But it's something that we have to watch quite carefully.”

Similarly, Harper also said the agency is watching the increase in delinquencies, noting the delinquency ratio is the highest since 2014, adding that auto loan delinquencies are up 16 basis points, year over year, to 83 BPs.

Overall, total assets in federally insured credit unions rose by $79 billion, or 3.5%, over the year ending in the second quarter of 2024, to $2.3 trillion, according to NCUA, which also acknowledged that the industry is facing some balance sheet challenges -

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Banks Income UP

WASHINGTON— The nation’s 4,539 commercial banks and savings institutions insured by FDIC reported aggregate net income of $71.5 billion in second quarter 2024, an increase of $7.3 billion (11.4%) from the prior quarter, according to new data from the agency.

The FDIC said a decline in noninterest expense and one-time gains on equity security transactions contributed to the quarterly increase. The results were included in the FDIC’s latest Quarterly Banking Profile released today.

Here is how the FDIC insured banks performed by category:

The Industry’s Net Income Increased From the Prior Quarter, Driven By Lower Noninterest Expense and One-Time Gains

Contributing to the more than $70 billion in net income was a decline in noninterest expense (down $3.6 billion, or 2.4%) along with higher noninterest income (up $1.2 billion, or 1.5%) and higher gains on the sale of securities (up $937 million) were the primary factors driving the increase in net income, the FDIC said, adding that higher provision expenses offset some of the increase in net income.

“The quarterly increase in net income was largely driven by nonrecurring items including an estimated $4 billion reduction in reported expense related to the FDIC special assessment, approximately $10 billion in gains on equity security transactions by large banks, and the sale of an institution’s insurance division that resulted in an after-tax $4.9 billion gain,” the FDIC said. “These increases were partially offset by several large banks selling bond portfolios at a loss and a $2.7 billion increase in provision expense.”

ROA

The banking industry reported an aggregate return-on-assets ratio (ROA) of 1.20% in second quarter 2024, up 12 basis points from first quarter 2024 but down one basis point from first quarter 2023. -

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