Early Indicators Point Towards a Much-Needed Increase in Loan Balances

The credit unions participating in Callahan & Associates complimentary First Look program have reported strong growth in loan balances in the 3rd quarter. These 607 credit unions representing approximately 24.7% of the industry with $158 billion in assets, have reported strong lending activity throughout the year, but a lot of this lending activity was part of a nationwide refinancing boom that resulted in a lot of originations and small amounts of balance sheet growth.

 
 

The credit unions participating in Callahan & Associates complimentary First Look program have reported strong growth in loan balances in the 3rd quarter. These 607 credit unions representing approximately 24.7% of the industry with $158 billion in assets, have reported strong lending activity throughout the year, but a lot of this lending activity was part of a nationwide refinancing boom that resulted in a lot of originations and small amounts of balance sheet growth. However, during this most recent quarter, credit union originations have had a much greater impact on the balance sheet.

These First Look participants grew loan balances 4.03% in the third quarter, up from 2.64% in the second quarter. The loans credit unions originated in this most recent quarter were far more likely to "stick" to the balance sheet. In all, 16.88% of loans originated in the third quarter were reflected in balance sheet growth, up from 12.62% in the second quarter. Indicating a decline in refinancing activity, the percentage of real estate loans granted that "stuck" to the balance sheet jumped from 8.88% to 18.42%.

Credit unions' ability to grow loan balances on the balance sheet, coupled with a seasonal slowdown in share balance growth, has resulted in the first significant increase in their collective loan to share ratio since 2000, as these credit unions grew the ratio 177 basis points to 72.16%. The graph below shows the quarter-to-quarter change in loan to share ratio as measured in basis points.

 

 

 

Nov. 3, 2003


Comments

 
 
 
  • Wish you could break this out between mortgages and consumer loans. The recent mortgage boom looks like it has passed and breaking it out will allow us to see where the activity is for both.
    Anonymous
     
     
     
  • Editor's Note: Mortgage loans had a strong 3rd quarter among First Look participants, as balances grew 5.9% in just those 3 months (compared to 4.3% in the 2nd quarter). These credit unions also originated more First Mortgage loans in the 3rd quarter than the 2nd quarter, $8.5 billion compared to $6.5 billion. Even though the mortgage boom didn't slow down in the 3rd quarter, the refinancing boom my have. A smaller portion of originations appeared to be refinances, as a higher percentage "stuck" to the balance sheet growing the total portfolio. Future content on CreditUnions.com will delve deeper into the composition of the strong loan growth experienced by credit unions.
    Anonymous
     
     
     
  • Editor's Note: Mortgage loans had a strong 3rd quarter among First Look participants, as balances grew 5.9% in just those 3 months (compared to 4.3% in the 2nd quarter). These credit unions also originated more First Mortgage loans in the 3rd quarter than the 2nd quarter, $8.5 billion compared to $6.5 billion. Even though the mortgage boom didn't slow down in the 3rd quarter, the refinancing boom my have. A smaller portion of originations appeared to be refinances, as a higher percentage "stuck" to the balance sheet growing the total portfolio. Future content on CreditUnions.com will delve deeper into the composition of the strong loan growth experienced by credit unions.
    Anonymous
     
     
     
  • Wish you could break this out between mortgages and consumer loans. The recent mortgage boom looks like it has passed and breaking it out will allow us to see where the activity is for both.
    Anonymous