As we move into 2011, I would like your readers to know there are good news stories to tell about credit unions-stories that aren't always getting the notice they deserve. As Credit Union Times reported in its Dec. 8 issue ("Data: CUs' Heavy Challenges"), NCUA's data shows that credit unions' net income and net worth increased during the third quarter. But in fact, the news is even better. The $3 billion increase in net income reported actually represents a nearly 80% year-over-year increase. And we need to remember that capital levels remain strong and are rising-with the net interest margin, operating expense ratio, and loan loss provision all improving in 2010.
There's also a brighter story about credit union lending, which wasn't told in the Dec. 8 article. Here are some key points Callahan & Associates brought up in our third-quarter "Trend Watch" that I believe everyone in the credit union community will find encouraging.
At a time when many financial institutions continue to keep a tight fist on lending, credit unions reached their highest point in third-quarter loan originations in five years. The $70 billion in loan volume during the quarter means credit unions were originating $1 billion each business day. First-mortgage originations grew 45% from the second quarter; 2.2% year over year. Consumer lending also rose, up 6.2% from the second quarter.
More importantly, credit unions are doing exactly what they're supposed to do-help members' financial well-being. Their mortgage refinancings are giving many members much-needed lifelines, adding between $100 and $200 a month to consumers' household incomes. For example, Wright-Patt Credit Union has more than $600 million mortgage dollars in queue for its CUSO, and approximately 80% of those are refinancings.
Statistics may not lie, but they are always subject to interpretation. At first glance, credit union lending may seem flat. But looking a little deeper, we see positive signs in the numbers. We believe credit unions should make big plans for 2011.
Callahan & Associates