Credit Unions Continue To Lend Despite Slow Recovery

Year-to-date loan originations are up for co-ops in the third quarter of 2011, according to early data.


Credit unions reported originating nearly $152 billion in loans in the first three quarters of 2011, up 4.8% from the same time period a year prior, according to Callahan & Associates’ FirstLook data with 5,108 credit unions reporting. Out of the loans funded in 2011 so far, more than $53.4 billion were in the third quarter alone. Year-to-date, the $92.5 consumer loan originations credit unions reported through September 2011 were higher than they were in both September 2009 and 2010, when they were $86.8 billion and $83.5 billion respectively. First mortgage originations in 2011 are on par with year-to-date September 2010 first mortgage originations, the preliminary data shows.

Click on Graph For Larger Image  |  Source: Callahan & Associates' Peer-to-Peer

The amount of loans on the balance sheet grew at the fastest rate since the fourth quarter of 2009, up 83 basis points for these credit unions from 12 months ago. This balance sheet growth came despite continued elevated sales of mortgages amid record-low interest rates. Sales of first mortgages to the secondary market continue were $18.2 billion year-to-date through September, remaining high compared to historical levels and comprising 42.5% of all first mortgages originated year-to-date in 2011. By loan type, member business loans had the highest growth with 12-month growth of 5.9%; used auto loans had 12-month growth of 5.1%.

Click on Graphs For Larger Image  |  Source: Callahan & Associates' Peer-to-Peer

Despite strong share growth of 6.0% over the past 12 months, the loan-to-share ratio was 69.7% as of the third quarter for these FirstLook credit unions, down only 17 basis points from the second quarter. This is a result of these credit unions having strong growth in the average number of checking accounts, with 12-month growth of 5.1% in the third quarter.

Finally, increased anti-bank sentiment has likely driven more citizens to join credit unions in recent weeks, and credit unions can capitalize on this rise in shares by lending to these new members.