The mortgage market meltdown was the top story for much of the financial press during the third quarter. Turmoil in the credit markets and tighter liquidity led the Federal Reserve to cut interest rates 50 basis points in September and another 25 basis points in October. Some of the nation's largest financial institutions took billions of dollars in writedowns related to mortgage securities. One in four domestic banks reported tightening their lending standards on consumer loans during the quarter while 40 percent reported tightening lending standards on prime mortgages.
Although not immune from some of the challenges in the market, credit unions continue to post solid performance in 2007. Annual asset growth of 6.1 percent is being achieved through balanced loan and share growth. Return on assets of 75 basis points is unchanged from mid-year. Delinquency, while rising, remains low at 0.82 percent. Capital levels are strong with an 11.5 percent net worth to assets ratio as of September.
Most importantly, America 's 8,333 credit unions continue to serve their more than 88.5 million members at a time when they need it most. Many credit unions are proactively assisting members who have questions or concerns about loans from other lenders. Through one-on-one counseling, partnerships with community groups and public seminars, credit unions are reinforcing their position as a true financial partner for their members.
Third quarter credit union performance highlights include:
- Total loans grew 6.3 percent over the 12 months ended September to reach $530.8 billion
- Year-to-date total loan originations of $190.6 billion are on par with the first nine months of 2006
- The credit union real estate loan portfolio remains strong, rising 10.0 percent over the last year
- Credit unions remain active real estate lenders as first mortgage volume of $44.8 billion through September exceeds the $41.3 billion originated during the first three quarters of 2006
- The auto sales slowdown continues to impact credit union auto lending with the auto loan portfolio growing just 0.7 percent over the past year
- Credit unions are sustaining momentum in credit card lending with balances rising 13.9 percent in the last 12 months to $28.7 billion
- The share portfolio has risen 5.8 percent over the past 12 months led by double digit annual growth in certificate and money market balances
- Net interest margin has stabilized for credit unions, reaching 3.14 percent as of September versus 3.12 percent as of June and 3.09 percent in the first quarter
For a complete look at third quarter results, join us for the Trendwatch Call on Thursday November 29th and Friday November 30th .