Double Digit Loan & Revenue Growth Seen in Preliminary Second Quarter Data

Balance sheet growth and income statement momentum are two early indicators of second quarter industry performance, courtesy of Callahan’s FirstLook program.


A FirstLook at the second quarter balance sheet reveals that lending momentum remains strong, share growth has slowed, and member growth is steady.  The income statement shows positive results, with revenue rising at a double-digit rate and slight net interest margin expansion. 

This data is compiled from 5300 Call Reports submitted to Callahan’s FirstLook program by 246 credit unions with total assets of $164.6 billion, almost 25% of the credit union industry.  Final results will likely differ from these figures, but the observed trends are representative of what is expected for the industry.

Key Balance Sheet Trends

Compared to second quarter data from 2005, the June balance sheet depicts the following 12-month growth trends:

  • A pick-up in loan growth to 14.1% from 13.1% in 2005
  • A slight decline in share growth, falling from 6.8% in 2005 to 6.1% in 2006
  • As a result of these two trends, the loan-to-share ratio posted a significant increase, rising to 84.2% from 78.2% in 2005 for FirstLook credit unions

Key Income Statement Trends

The income statement for the first half of 2006 shows promising results when compared to the first half of 2005.

  • Total income rose 19.1%
  • Rising rates and a growing loan portfolio resulted in a significant pick-up in interest income, up 20.7%
  • Non-interest income growth is solid but slowing, up 12.3% compared to 14.9% growth a year ago
  • Higher rates resulted in cost of funds jumping from 1.7% in June 2005 to 2.4% in 2006
  • Net income for FirstLook credit unions declined 3.9% versus the first half of 2005

The following graphs indicate that credit unions may be moving off of lows in net interest margin (NIM) and return on assets (ROA).  While the NIM has dropped eight basis points year-to-date versus midyear 2005 levels, the second quarter data for FirstLook credit unions exhibits a two basis point increase from first quarter levels.  ROA posted similar results; it decreased 11 basis points versus June 2005 but increased four basis points between first and second quarter.


The NIM and ROA pick-up in the second quarter provides some earnings breathing room.  With the market predicting an end to the Fed’s tightening cycle soon, some margin pressure may be relieved in the second half of the year.  Although the loan-to-share ratio remains high, the strong loan growth is boosting revenue. Member growth is steady at 4.6% compared to 4.7% in 2005.  Overall, the preliminary second quarter data indicates that the credit union industry remains solid, with steady growth in the balance sheet and income statement momentum. 

To see how your credit union’s trends over this past quarter compare to your peers, we invite you to participate in the FirstLook program.  By participating in FirstLook, your credit union gains access to data that is available weeks before its NCUA release date. 




Aug. 7, 2006



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