Credit Union Balance Sheet Breaks Records in the First Quarter

While the income statement is getting most of the attention, key components of the credit union balance sheet have captured record growth in the first quarter.

The first quarter of 2009 was full of both highs and lows for credit unions. While it is no secret that credit union earnings struggled in the first quarter, credit unions also managed to counter those trends with record growth reported in a number of key balance sheet categories. These record figures continue to point to the strength of the industry, and members' flight to quality.

Quarterly Share Growth at Record Levels

Share growth broke records in March of 2009. Credit union share balances totaled $735.4 billion at the end of the first quarter. This figure marks an increase of $43.6 billion in new shares in just the last three months. This 6.3% quarterly growth is a record high for credit union share increases.

The main drivers of this quarterly growth were increases in regular shares and money market balances. At the end of March credit unions reported $206.2 billion in outstanding regular shares, an increase of 7.8% during the quarter, and an annual growth rate of 8.6%. Money market shares grew at an even faster rate, increasing 8.2%, or $10.6 billion during the quarter, to total $141.0 billion on March 31st.

Loan Originations Notch Double-Digit Growth

Credit union loan balances also experienced strong growth in the first quarter. Loans increased 5.9% annually, helped along by a strong increase in loan originations in the first quarter. Credit unions originated $68.7 billion in new loans during the first quarter. This high origination volume represents a 12.8% increase from the loans originated during the same period in 2008.

Real estate loans represented the largest portion of credit union originations in the first quarter. The first three months of 2009 saw credit union originating $25.7 billion in new first mortgages, and an additional $5.4 billion in other real estate loans. Credit unions first mortgage originations in the first quarter of 2009 were up $7.3 billion as compared to the same period during 2008, though other real estate originations did decline from levels reported in 2008.

Credit Union Membership Growth Highlights the Credit Union Difference

Bringing new members into the fold is one way that credit unions can maintain growth in their loan and share balances, and credit unions accomplished this task in the first quarter. In March, credit union membership totals crossed the 90 million mark for the first time as membership reached 90.5 million members with a 1.8% annual growth rate.

Included within the annual growth figures were the 645,000 net new members that credit unions added in the first quarter alone. This represents a 72 basis point quarterly growth rate, the highest first quarter growth rate experienced since 2002. Growth rates prior to 2002 are not comparable to current figures as previous NCUA regulations only required credit unions greater than $50 million in assets to file first and third quarter call reports.

Finding Success Among the Turmoil

While difficulties in the external markets have affected the credit union marketplace, there is still good news to be found. As other lenders step back from the market, credit unions continue to provide members the financing and services they need. As such, credit unions have found strong growth in membership levels, loan originations, and share balances. Though there is uncertainty ahead in the financial services market, credit unions are positioned to build upon their core strengths as 2009 continues.