Unlike their banking brethren, US credit unions experienced a surge in deposits in the first quarter of 2023.

While the US banking sector lost 2.5% of its deposit base compared to year-end 2022, total shares and deposits increased 2.1% at credit unions, according to S&P Global Market Intelligence data.

Balance sheet changes

Growth in total shares and deposits outpaced growth in total loans and leases for the first time in two years. The aggregate balance of shares and deposits jumped up $39.85 billion. Share certificates were up $65.92 billion, more than offsetting a $25.25 billion decrease in money market deposit accounts.

Total loans and leases increased 1.6% quarter over quarter, representing the slowest growth rate since the first quarter of 2021. Most loan categories had higher balances, but fixed-rate first mortgages were down just over $1 billion, or 0.3%.

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Largest credit unions

Of the 20 largest credit unions by total assets at March 31, just three reported quarterly contraction in shares and deposits: Raleigh, NC-based State Employees CU; San Diego-based San Diego County CU; and North Liberty, Iowa-based GreenState CU. The latter two also had lower balances of loans and leases.

Vienna, Va.-based Navy FCU, the nation's largest credit union, tied for the highest deposit growth among the top 20 group at 7.6%. Navy FCU's growth was matched by Sandy, Utah-based Mountain America FCU.

In terms of quarterly change in net charge-offs (NCOs) to average loans, Navy FCU had the highest increase at 50 basis points. Bethpage, NY-based Bethpage FCU was the only credit union among the top 20 that reported a drop in its NCO ratio.

On the other hand, Bethpage FCU had the highest increase in delinquent loans to total loans at 18 basis points. The delinquency ratio improved at most of the top 20 credit unions, led by State Employees' decline of 90 basis points.

Credit quality trends

For the entire credit union sector, NCOs to average loans was 0.52%, up 9 basis points quarter over quarter and representing the highest level since the first quarter of 2020. It was the sixth consecutive quarterly increase, following seven straight quarterly declines.

The delinquency ratio mirrored the NCO ratio for the first quarter at 0.52%. That was down 9 basis points from the end of 2022 but up 10 basis points from the year-ago quarter.