Credit Unions Post Strong Lending Volume in First Quarter

Record 2010 loan origination momentum carries into 2011.


Credit unions ended 2010 with record lending momentum — posting new highs in loan volume for both the fourth quarter and second half of the year. The momentum slowed just slightly in the first three months of 2011. With the exception of 2009, the first quarter is normally the slowest quarter of the year. Through March 31, 2011 5,314 FirstLook credit unions representing 78% of the industry’s assets posted $46.5 billion in originations. This is a 15.9% increase over the first three months of 2010 and is the highest annual growth rate of quarterly loan originations in recent history.

Quarterly Loan Originations

Source: Callahan's Peer-to-Peer

Otherwise, credit union lending remains similar to previous quarters. Fueled by the low-rate environment, credit unions turned in a strong performance for first mortgage originations, which they then sold to the secondary market to avoid holding onto fixed-rate long-term assets. Credit unions’ selling to the secondary market coupled with consumer behavior — such as reducing, refinancing, and eliminating debt — resulted in slower balance sheet growth compared to pre-recession levels. Loans are down year-over-year, but the rate of decline is improving. In September, the annual rate for these credit unions was -0.96%; now it is -0.23%. 

12-Month Loan Growth & First Mortgage Sales

Source: Callahan's Peer-to-Peer

So what loans are going on the books? Credit unions posted a steady growth rate in first mortgages, particularly those that members might pay off quickly. This portion of the loan portfolio hit 4.3% this year, which is slightly higher than the 4.2% growth rate credit unions posted in March 2010. Credit unions accelerated their used auto loan growth over the past year and posted positive growth in credit cards and other loans, albeit that growth is slower than in 2010.

Year-Over-Year Loan Growth

Source: Callahan's Peer-to-Peer