Published in: CUNA Finance Council

Year-end industry analysis has shown that 2018 was a standout year for credit union performance. Credit unions recorded the highest ROA and ROE metrics observed post-crisis, and industry net worth finished at one of the strongest levels in years. With short-term rates having increased 2% in three years’ time, the influence of increasing asset yields on performance cannot be understated; but another key factor has contributed to healthier bottom lines – a low, sticky cost of funds. However, given current upward trend in industry cost of funds, this advantage might be nearing an end.

Credit unions have seen a steady increase in net interest margins throughout the FOMC’s tightening activities, but market concern is shifting focus to when the earnings benefit might come to a halt. Can the trend persist given the current level of rates and the sustained pressure of economic growth? Can credit unions continue to fund asset growth with the low, stable costs of yesterday?

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