As far as credit union performance goes, 2014 has already been one for the record books — a true testament to the value these member-owned cooperatives are delivering to Americans.
Net loan growth through the first six months of the year was nearly $29 billion; that’s the highest ever recorded in the industry. Additionally, the loan growth rate over the past 12 months was the fastest since 2005.
12-MONTH LOAN GROWTH VERSUS 12-MONTH SHARE GROWTH
DATA AS OF JUNE 30 | FOR ALL U.S. CREDIT UNIONS
© Callahan & Associates | www.creditunions.com
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Loans are growing at the fastest annual pace since 2005.
Source: Peer-to-Peer Analytics by Callahan & Associates
Consumer lending played a major role in that growth. Credit unions originated a record $106 billion in auto, credit card, and other consumer loans during the first half of 2014.
Although mortgage originations declined amid shrinking refinance activity, credit unions captured 9.0% of the first mortgage market nationally in the second quarter compared to a previous high of 7.8%. This makes the industry the second largest mortgage lender in the United States, trailing only Wells Fargo.
But that’s the past. As the industry looks toward the second half of the year and draws closer to the second half of the decade, where is it headed? Credit unions are rapidly closing in on the 100-million-member mark — at 99.2 million individuals — and the industry’s product and delivery strategies are evolving in anticipation of the next generation of member-owners.
For example, as young adults exit college with growing amounts of debt, many have had a difficult time attaining a first loan. In response, Eli Lilly Federal Credit Union ($1.1B, Indianapolis, IN) created its New College Graduate Program to extend its student-lending program and reinforce its relationship with student borrowers after graduation.
The credit union provides an auto loan of up to $25,000 and a Visa credit card with a $1,500 limit to any individual who has graduated in the past six months, has accepted a job offer, and has had no previous credit issues. By interacting with students and parents prior to graduation as well as holding seminars for new employees of its SEGs, Eli Lilly FCU is positioning itself as a long–term partner that is ready to meet the financial needs of young adults.
In mortgage lending, first-time homebuyer programs and products are also creating wins for both members and credit unions. NASA Federal Credit Union ($1.3B, Bowie, MD) launched its Family Mortgage product earlier this year as a way to help younger buyers purchase their first home. Parents can co-sign for a loan even if they are not planning to live in the home. After five years — when their child has an established credit record — parents can remove themselves as co-signers.
For autos, online and mobile research applications such as CU Direct’s autoSMART program have helped credit unions position themselves as subject matter experts and educational resources early on in the research process, which can start weeks or months before a member purchases a car.
These are just three recent examples in the industry’s 100-year history that demonstrate how credit unions can adapt while holding fast to the community- oriented values that separate them from the pack.
With its growing network of peers, CUSOs, corporates, and associations, the peaks this industry is summiting today are only the basecamp for the new heights it could reach tomorrow.
COMING SOON: The second quarter 2014 edition of Strategy & Performance hits desks in October. Visit the archive page on CreditUnions.com starting October 13 for full access to this quarterly review of industry successes and opportunities.