Rebounding Share Growth in 2007? It Appears So!

A preliminary look into first quarter data shows continued momentum in credit union growth in 2007.


The Dow Jones Industrial Average closed at another record high on Thursday, May 3 at 13,241.38. With 2007 being a strong year for the financial markets thus far, one would expect deposit growth in financial institutions to be sluggish at best due to the other investment opportunities available. However 209 credit unions representing over 20% of industry assets reporting through Callahan’s First Look program shows share growth continues to build on the momentum that began in the fourth quarter 2006.

Strength in Shares

Posting the highest rate of quarterly share growth since fourth quarter 2003, shares grew 4.9% over the past three months for these 209 credit unions. This strong showing is a positive sign for the industry and gives an indication of industry trends prior to the full data release. First Look participants are generally larger credit unions, therefore results will mirror trends rather than actual first quarter results.

What were the share growth results for the two largest credit unions in the country, Navy and State Employees’ North Carolina? Navy had its highest level of quarterly share growth since March 2002 at 5.8%.

SECU is experiencing similar success in share growth. The 5.3% growth rate for the first quarter of 2007 is the strongest since March 2003 when quarterly growth reached 6.1%. With these results, it appears the nation’s largest credit unions are starting off the year on a strong note.

Optimism in 2007

Part of the reason for the growth is that credit unions are giving more back to their members than ever before. Member dividends are still going strong with a 42.4% increase over the last year. And members are responding by depositing more funds with credit unions as evidenced by the share growth. The cost is a continued decline in net interest margin for these 209 credit unions. However, the net worth ratio remains in double digits and has increased over the past 12 months.

Loan Quality Remains Sound

Even though delinquencies have increased 26.7% over the past year, loan quality remains higher than other financial institutions with a delinquency rate of 0.45%. Quarterly loan growth has remained steady. At 1.6%, growth is higher than the lowest level set in March 2004 at 1.4%. Auto lending showed signs of rebounding. Quarterly growth is up to 0.7% in March 2007 from the last quarter but at its lowest first quarter level in the past five years. Real estate lending is at its lowest first quarter level in the past five years as well growing at 2.7%, but remains steady in today’s slumping housing market.

Overall, credit unions appear to be regaining momentum in shares while holding steady in loan growth.

For more information on Callahan’s First Look program and how you can get the data before the NCUA release, please contact Mike Werstuik at 800-446-7453 x139 or click here.