On Tuesday afternoon, Callahan & Associates hosted its quarterly Trendwatch webinar, an analysis of quarterly 5300 Call Report performance data that contextualizes industry successes and showcasing individual credit union strategies. Here are three takeaways from Day One of Trendwatch 4Q 2013:
1. Record Lending Performance
If consumer activity is the driver of growth, then the 125 million loans credit unions have made to members since 2008 indicates a growing industry. Despite steadily rising interest rates, the credit union industry grew most areas of its lending portfolio. First mortgages dipped as a result of declining refinances, but overall loan growth outpaced share growth for the first time since 2008. According to Callahan & Associates’ Peer-to-Peer analytics, as of December 31:
Credit unions originated $345.8 billion in loans. That’s a 4.6% year-over-year increase and the largest figure in industry history.
Member business loans grew from $14.7 billion in 2012 to $16.7 billion in 2013; consumer loans grew 8.5% during the same period, from $174.2 billion to $189 billion.
New and used autos grew 11.2% and 9.8%, respectively, year over year. Credit unions financed 16 million new auto loans in 2013 compared to 15.3 in 2012.
First mortgage originations fell from $124.1 billion to $119.6 billion year-over-year. Credit unions now hold 6.8% mortgage market share; that’s down slightly from 7% in 2012.
Loans have grown at the strongest clip since 2008, 6.9%, while shares have grown 2.8%, the slowest growth in more than five years.
The loan-to-share ratio of 70.9% is the highest since 2010’s 71.8%.
2. A Focus On Member Owners
Credit unions are distinguishing themselves from other financial institutions and communicating their cooperative impact. Credit union strategies highlighted in this quarter’s Trendwatch include:
TDECU ($2.1B; Lake Jackson, TX): The institution was the real estate market leader in Brazoria County in total units sold, percentage of market share, and total volume sold.
Educators Credit Union ($1.4B; Racine, WI): Through its Fast Lane Financing program, the institution saved members $16.4 million in 2013 and more than $88 million since 2008.
State Employees Credit Union ($27B; Raleigh, NC): The institution broke its own rule against advertising to publish a Valentine’s Day message to members, thanking them for their role in the community and in the state’s future.
3. Risk-Based Capital
As the discussion surrounding the NCUA’s risk based capital rule intensifies, the camps in support and dispute will grow in number and in volume. Using Callahan & Associates’ Peer-to-Peer analytics, executive vice president Jay Johnson and board chair Chip Filson discussed five years of ratio data, showing how the credit union strategy remains financially strong and well capitalized and has been so since fourth quarter 2008. According to three different metrics — the Risk-Based Capital Ratio, the Capital Ration, and the Net Worth Ratio — credit unions currently exhibit 15.5%, 11.3%, and 10.7% capitalization levels, respectively.
Filson believes NCUA’s new proposed individual minimum capital requirements might inhibit long-term planning at credit unions because the regulator can alter capital levels based on its subjective judgment as opposed to a rigid mathematical formula or wholly objective criteria.
Don't Miss Trendwatch Day 2
If you missed out on Trendwatch Day 1, no worries! There's still time to register and attend the second session. It starts at 11:30 a.m. EST on Wednesday, Feb. 19. The event is free for all to attend.