With the stock market on the rise and interest rates no longer falling at a rapid pace, it appears credit unions faced a different economic environment at the end of 2003 from the previous two years and are in a period of transition. This information is based on data gathered from leading credit unions who have participated in our First Look program. These credit unions tend to outperform the industry as a whole, however, their respective performance provides insight into trends for the entire industry.
One area where credit unions may see a decline is in share growth. Improved stock market performance coupled with a seasonal slowdown in savings growth has led to subdued growth in share accounts and share balances. Loan growth should outpace share growth in 4th quarter leading to the second consecutive quarter of increase in the loan to share ratio. While loan originations are high by historical standards, they appear down from the 3rd quarter. This is due to a slowdown in real estate originations, probably caused by less refinancing activity.
The decreased real estate loan volume may have an adverse effect on net income. Fees associated with real estate lending have helped generate service revenue that has been instrumental in credit unions' net income throughout 2003. An early look indicates that service revenue and net income are both down from the 3rd quarter.
The chart below details some of the key figures we found from credit unions who have participated in our First Look program. To find out how you can get involved, click here.