With the average loan yield three times the investment yield, a key challenge for many credit unions in the second half of 2010 will be growing loans. Anecdotally, we’ve heard of many credit unions that have seen loan volume increase through the third quarter. Identifying and taking advantage of lending opportunities requires proper evaluation of your loan portfolio.
Geographical and standard asset-based peer groups can start the analysis, but to truly benchmark your credit union’s performance, you need to compare your credit union with others with similar business models. We looked at all credit unions between $100 million and $1 billion and tried to identify different business models through the loan portfolio. Take a look at the varying performance as of June 30, 2010.
Peer Group Analysis
Data as of June 30, 2010 | Credit Unions Between $100M and $1B with Specific Loan Concentrations
Click chart to view larger version. Source: Callahan & Associates’ Peer-to-Peer Software
- Credit unions that had more than 25% of loan concentration in outstanding indirect loans posted the strongest annual loan growth.
- Credit card lenders had the highest yield on average loans, but the lowest interest income on a per loan account basis.
- Credit unions that focus on member business lending had the highest average loan balance (and the associated metric of loan interest income per loan account).
- “Other” lenders (which include a wide variety of loans) had the highest loan to share ratio at 83.1%. In aggregate, these credit unions are also originating high-dollar loans in 2010. Year-to-date, the average value of an originated loan is nearly $19,000.