After a strong quarter of mortgage originations in spring 2003 and an uptick
in rates to begin the third quarter, many expected the mortgage boom to falter.
Had the drop off occurred, credit unions would have felt a squeeze on their
ROA, given today's low interest rates and the influx of service revenue provided
by mortgage originations.
Preliminary third quarter numbers are here, and it is apparent that the mortgage
boom did not falter in the third quarter. The early aggregate statistics merely
confirm what many credit unions individually experienced this summer - sustained
growth in mortgage originations, no fall off in service income, and stable ROA.
The table below provides a quarter-by-quarter look at the past year. The data
in the table is from third quarter 5300 call reports of 758 credit unions, making
up about 27% of total industry assets, submitted to Callahan & Associates' First
Comparing these credit unions' third quarter with that of third quarter 2002,
quarterly mortgage originations have grown substantially. Credit unions' $9
billion in third quarter 2003 mortgage originations was $2.1 billion more than
second quarter 2003, and over double third quarter 2002. Service income also
stayed strong, growing from 1.06% of average assets one year ago, to 1.20% of
average assets in third quarter 2003. Quarterly ROA is not the 1.25% it was
one year ago, but it remains positive and relatively steady at 1.11%.