Callahans has had its hands on third quarter data for a week and that was just
enough time to produce another first-rate Trendwatch call, sponsored by Liberty.
This quarter's Trendwatch was presented by John Olivo from Goldman & Sachs,
Chip Filson, President of Callahan & Associates, Tom Swierzy, CEO of SB1
credit union, and Alan MacEachin, Manager of Investments for Navy Federal Credit
John Olivo portfolio manager with Goldman & Sachs Asset Management Group
opened up the call with an economic review and interest rate outlook. John highlighted
increased third quarter economic growth, but stated that interest rates will
not increase until 2005 because the mortgage refinancing slowdown will constrain
Chip Filson, president of Callahan & Associates presented next, delivering
a snapshot analysis of third quarter credit union performance. Loan growth outpaced
share growth in the third quarter, driving a higher loan-to-share ratio. Chip
cited a 17.9% first mortgage loan growth over the past 12 months as the major
driver in overall loan growth increases. Chip also noted that non-interest income
was greater than net income balances for the second quarter in a row.
Chip then wrapped up his presentation noting $29.2 billion in third quarter
mortgage originations, bringing the year to date total to $72.8 billion, resulting
in $6.2 billion in balance sheet increases for the third quarter. Much of the
difference between third quarter originations and balance sheet increases are
attributed to $10.4 billion in sales to the secondary market.
Tom Swierzy, CEO of SB1 FCU in Philadelphia, PA shared his recent success in
loan growth-a 30 percentage point increase in SB1's loan-to-share ratio since
the second quarter. The loan growth was fueled by a new home equity offering:
a 4.99% fixed rate home equity loan refinancing option with a life of up to
15 years, which contributed to the $104.6 million in real estate originations.
To fund these originations and hedge interest risk, SB1 match-funded some of
the mortgages with a $25 million loan from the Federal Home Loan Bank and also
plans to sell some of the mortgages in the secondary market.
Finally, Navy Federal Credit Union's Manager of Investments, Alan MacEachin
talked about Navy's 1.74% ROA. Behind this phenomenal statistic were Navy's
$244 million year-to-date net income and a non-interest income/average assets
ratio of 1.54%, much of which is attributed to gains on sale of mortgage securities
and newly recognized servicing revenue.