Kentucky Credit Unions

Member engagement remains KY credit unions' most persistent structural challenge. Member growth stood at -1.27% in Q1 2026, still negative but showing meaningful improvement from -2.21% in Q4 2025 (QoQ acceleration of +0.95 pp) and from -1.87% in Q1 2025 (YoY acceleration of +0.60 pp). Despite this directional improvement, the cohort trails the national benchmark of -0.65% by 62 basis points. The pace of attrition is slowing, but KY credit unions have yet to reverse the trend — sustained negative membership growth signals ongoing competitive pressure for member acquisition and retention.

Profitability deteriorated in Q1 2026, with ROA falling to 0.60% from 0.73% in Q4 2025 — a QoQ decrease of 0.13 pp — and down from 0.74% in Q1 2025, a YoY decrease of 0.14 pp. The cohort now sits 7 bps below the national ROA of 0.67%. Net interest margin held relatively stable at 3.61%, easing just 4 bps from 3.66% in Q4 2025 (QoQ) while gaining 5 bps from 3.56% in Q1 2025 (YoY). NIM remains 9 bps below the national 3.70%. The ROA decline, despite stable NIM, points to rising non-interest expenses or elevated provisioning as the primary profitability drag.

Growth signals were mixed in Q1 2026. Asset growth decelerated modestly to 2.67% from 2.75% in Q4 2025 (a QoQ deceleration of 8 bps) and more sharply from 5.00% in Q1 2025 (a YoY deceleration of 2.33 pp), though the cohort still edges the national benchmark of 2.64% by 3 bps. The more encouraging signal came from loan growth, which accelerated to 0.51% in Q1 2026 from -1.01% in Q4 2025 — a QoQ swing of +1.52 pp — and now sits 20 bps above the national 0.31%. YoY loan growth data is unavailable for direct comparison, but the return to positive territory is a constructive development.

The risk profile for KY credit unions showed a split picture in Q1 2026. Delinquency improved to 0.68% from 0.74% in Q4 2025 (a QoQ decrease of 6 bps), remaining 10 bps below the national 0.78% — a favorable position. However, on a YoY basis, delinquency increased 7 bps from 0.60% in Q1 2025, signaling a gradual credit quality erosion over the past year. Net worth decreased to 13.53% from 13.81% in Q4 2025 (down 0.28 pp QoQ), though it increased 0.32 pp from 13.21% in Q1 2025 (YoY), and sits 9 bps below the national 13.61%. Capital adequacy remains solid but is trending down near-term.

KY credit unions continued to shift their portfolio toward first mortgages in Q1 2026. First mortgage concentration rose to 23.43%, up 0.54 pp from 22.89% in Q4 2025 (QoQ) and up 1.33 pp from 22.10% in Q1 2025 (YoY), exceeding the national benchmark of 22.15%. Share certificate concentration also climbed to 22.79%, up 0.43 pp from 22.36% in Q4 2025 and up 0.57 pp from 22.23% a year ago — well above the national 19.80%, suggesting member preference for higher-yield deposits. Indirect auto held nearly stable at 7.72%, essentially matching the national 7.73% and down slightly from 8.07% a year ago.