The Best Year Ever?

Industry officials and trade publications are reticent on proclaiming success in 2009. In a system with 7,700 plus institutions, there will be divides. There's no denying some credit unions have struggled, however, severe troubles are few for many organizations. And for another subset of the industry, it was one of the best years ever. Three themes dominated headlines in 2009: lending, asset quality, and earnings. We've highlighted 10 credit unions – five with more than $250 million in assets and five with less than $250 million in each of three categories: Growth in Loans Originated Year-to-date, Delinquency, and Core Earnings. The results may surprise you.

We did put certain restrictions: credit unions that had a merger in 2009 were eliminated; credit unions in the Growth in Loans Originated YTD must have had at least $1 million in loan originations in 2008; and credit unions in the Delinquency group must have a Loans/Shares ratio of 50% or more and a minimum of $1 million in originations in 2008 and 2009.

Lending

Stand out credit unions in our $250M in assets or less group were all under $100 million, but they all tripled or quadrupled their loan originations from 2008 levels. Originations were generally smaller amounts but these credit unions extended credit to members in need. Sioux Empire's origination volume was more than double their asset size. Fueled by $137 million in real estate originations, Sioux Empire sold $123 million of the originations to manage interest rate risk. The push in lending also helped it gain 637 new members – a 7% annual growth.

Community Driven, created from a merger of Automotive FCU and MPG Community in 2008, used the merger momentum to expand in 2009. Outstanding loans increased 50% at the institution, mostly in auto.

The large counterparts didn't grow at the same astronomical rates, but they still more than doubled originations over the past year. Bank-Fund Staff posted $817 million in first mortgage originations, 73% of its total volume for the year. Similarly refinancing fueled total loan originations at many of its peers. These credit unions were more likely to sell conforming loans but retain servicing.

Earnings

The core earnings ratio calculates the return on the credit union's core business. To calculate: (net interest income + provision for loan losses + fee income + other operating income – operating expenses)/average assets. It was designed to compare credit union business models by minimizing the affect of outside influences, extraordinary gains or losses, and, now, the NCUSIF stabilization expense. Credit unions in both these groups serve wide geographic areas, including the beleaguered "sand states." Some of these credit unions have been hit hard by the economic recession, corporate write-downs, and the stabilization expense, but the core business remains sound.

Asset Quality

Credit unions in this category were concentrated in the Midwest and Southeast. Credit unions in the smaller asset-based peer group had no reportable delinquency as of December 31. For those credit unions, the year-end figures were an improvement over 2008 levels, which were still well below industry averages. Some of the credit unions charged-off loans they did not expect to return to on-time status. Credit unions in the larger category did post slight reportable delinquency, but all figures were significantly lower than industry and region averages. Additionally, all of these credit unions are lending to their membership. Strong ties, and a willingness to work with members who may be facing financial difficulties, helps suppress reportable delinquency.

What other categories should we examine to rank year-end performance? Post your suggestions in the comments section below and we'll cover them over the course of the next month.