Record Loan Volume, Stabilizing Asset Quality Headline Preliminary Third Quarter Data Trends

Preliminary results from credit unions participating in Callahan & Associates’ FirstLook program indicate continued strong share growth and lending activity in the third quarter.


Preliminary results from credit unions participating in Callahan & Associates' FirstLook program indicate continued strong share growth and lending activity in the third quarter. These credit unions represent nearly 75 percent of the industry's assets. The FirstLook program is the only source for aggregate credit union data prior to the NCUA's public release in late November. Below are some initial highlights from the quarter.

Loan Volume Up 6.9 Percent, Driven By Refinances

Despite a traditional slow-down in mortgage lending during the second half of the year, these same credit unions reported 39.7 percent increase in first mortgage originations in the third quarter over second quarter figures. On a year-to-date basis, first mortgage originations increased 38 percent, driven by low interest rate and refinances. The increase in mortgage originations drove total loan originations to a 6.9 percent increase over the September 2008 levels.

The same low-interest rate environment driving consumers to refinance, has led to increased selling of loans to the secondary market. Credit unions in the FirstLook program have more than tripled sales to the secondary market from September of 2008. On average, credit unions in our First Look program sold 50.0 percent of total first mortgages originated year-to-date. For comparison, in September of 2008 that figure was 19.2 percent.

Balance Sheet Growth Strong

Due partially to the heavy secondary market sales activity, outstanding loan growth has slowed among FirstLook credit unions. Total loans outstanding grew 4.6 percent from September of 2008, down slightly from the same group's annual growth rate of 5.7 percent as of June. Despite Invest in America and Cash for Clunkers, new auto loans outstanding decreased 2.1 percent. Used auto loan balances increased 7.1 percent.

Posting 11.8 percent growth since September of 2008, share growth has accelerated since June, when these same credit unions posted an annual growth rate of 9.9 percent. All categories of shares increased, though members parked their money primarily in Money Market (20.2 percent growth) and IRA & Keogh accounts (19.1 percent growth). Shares acquired were due to both new money, thanks to 3.4 percent member growth, and increasing relationships with existing members, as the average share balance increased 8.0 percent to $8,326.

With excess shares and slower loan growth, FirstLook credit unions have increased investments 27.7 percent from September of 2008.

Asset Quality Stabilizing

Total delinquency increased ten basis points for this group of credit unions to 1.66 percent at September 30. This is a slower rate of increase than last quarter, and on par with the first quarter of 2009. The third quarter saw a two basis point increase in the net charge-off rate. With both rates increasing at a slower pace credit unions may be showing signs of a stabilizing asset quality.

Callahan & Associates' Quarterly Percentage Point Change In Asset Quality Measures

Stay tuned throughout the next few weeks for more analysis on the credit union industry's performance in the third quarter.