Share Growth Continues to Slow in Third Quarter

Loan growth during the third quarter pushed forward while share growth lagged behind, according to Callahan's First Look project. Find out what the results indicate for the entire industry.

 
 

Credit unions continue to find robust loan demand but share growth is slowing according to data from Callahan's First Look quarterly data project. With 814 credit unions holding over 31 % of the industry's assets already on file, the quarterly sample suggests that credit unions have not increased rates even though the Federal Reserve has acted three times to push up overnight rates. The result was a quarterly share growth of less than 1% or about the same pace as new member increases.

Because loans grew by 3.59% or over four times the rate of share increase, investments continue to decline and borrowings rose by 8.2%. For twelve months ending September 30, 2004 for these 814 early responders, the growth in borrowings was 42.1%.

Credit union's cost of funds was unchanged between the second and third quarters. During the same period, the Federal Reserve raised the overnight Fed Funds rate by 75 basis points.

"The share slowdown in part reflects the reluctance of credit unions to increase their dividends. This has helped to improve ROA by 10 basis points. However flat dividend rates are leading to a decline in new shares," says Jay Johnson, executive vice president of Callahans.

The increase in short term rates does show up in a rise in the investment yield. However loan returns are still the same which reflects the very competitive markets for both autos (up 1.6%), and real estate outstandings, up 3.6% in the quarter.

Full quarterly reports for all credit unions is expected to be available the first week of December.

The First Look program provides credit unions an opportunity to look at quarterly data at the same time credit unions submit their files to NCUA, thus providing a 45-60 day advance window into credit union trends.

Any credit union can send their report and at the same time have access to all of the other data submitted by credit unions. To participate, credit unions simply email the 5300Data-[charter number].xml file to 5300@Callahan.com.

First Look Results for 3rd Quarter, 2004
814 Credit Unions Participating
Representing $202 Billion, 31% of the Industry's Assets
Representing 31%
of the Industry's Assets
First Look
CUs 6/04
First Look CU
CUs 9/04
Qtrly Loan Growth 4.44% 3.59%
Qtrly Share Growth 1.81% 0.82%
Qtrly Member Growth 2.81% 0.73%
Qrtly Borrowings Growth 13.63% 8.20%
Loans to Shares 72.58% 77.26%
YTD Return on Assets 1.00% 1.10%
YTD Yield on Loans 6.07% 6.07%
YTD Yield on Investments 2.50% 2.60%
YTD Cost of Funds 1.50% 1.50%

 

 

 

Nov. 15, 2004


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