KBRA releases research examining recent performance trends for U.S. credit unions (CU) with over $1 billion in assets, highlighting a meaningful inflection in earnings entering 2026. KBRA believes that 2025 marked a turning point for the CU sector, as margin recovery reestablished core earnings capacity following a period of funding pressure. Improving deposit dynamics, favorable earning-asset repricing, and more balanced loan and deposit growth supported a meaningful rebound in profitability. At the same time, the industry is shifting into a more normalized credit environment as asset quality softens from exceptionally strong post-pandemic levels with pressure concentrated in consumer portfolios. Therefore, elevated credit costs continued to temper overall performance. However, capital levels remain a key source of strength, supporting loss absorption capacity and strategic flexibility. Looking into the second half of 2026, KBRA expects margin performance to remain supportive, though expansion is likely to moderate as asset yields stabilize and funding costs gradually reprice. As a result, sustained earnings performance will increasingly depend on disciplined funding strategies, expense management, and prudent credit risk oversight.
Key Takeaways:
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About KBRA
KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.
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Anna Jezerski, Director
+1 301-960-7047
anna.jezerski@kbra.com
Hunter Chadwick, Associate Director
+1 301-960-7042
hunter.chadwick@kbra.com
Indra Elangovan, Director
+1 301-960-7051
indra.elangovan@kbra.com
Brian Ropp, Managing Director
+1 301-969-3244
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Joe Scott, Global Head of Financial Institutions
+1 646-731-2438
joe.scott@kbra.com
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Justin Fuller, Managing Director
+1 312-680-4163
justin.fuller@kbra.com
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