Credit unions made more loans in the fourth quarter of 2010 than in any other fourth quarter in history, said Jay Johnson, executive vice president of Callahan & Associates, as he crunched the latest numbers. The total amounted to $68.5 billion, said Johnson.
Another record was set for second-half lending, with credit unions lending $138 billion, per the Callahan calculations. That is the highest second-half lending by credit unions in history, said Johnson.
"Economists are upping their forecasts, consumers are more optimistic, we are seeing much more borrowing," said Johnson, who suspects the increased activity will continue into 2011 numbers as well.
What is important to recognize, added Johnson, is the fact of so much lending despite a widespread perception, even among some credit union professionals, that lending is down. The numbers, said Johnson, prove the opposite is occurring.
As for why there is a perception of deflated lending, Johnson pointed to a recent trend where credit unions are selling off a much higher percentage of the mortgages they originate, which in effect wipes the loans off their books. "What you see on the balance sheets does not necessarily reflect the lending that is taking place," said Johnson.
He added that right now credit unions are selling around half of their mortgages. Historically, that number has been nearer to 20%. "If you are only looking at the loans on the balance sheet, you are not seeing the true picture," said Johnson.
Looking ahead, Johnson indicated that he saw many reasons for credit unions to stay optimistic about loan volumes. He ticked off what he believes are the key opportunities.
"Car loans, especially used cars and car loan refinancing, should continue strong for credit unions. Mortgages. We are seeing a pickup in HELOC volume and also are beginning to see an increase in first mortgages. Credit cards. Banks are starting to pull back in this area which creates opportunity for credit unions."
"The present interest rates make this an ideal time to borrow," said Johnson. He added that as more consumers feel optimistic, they likely will borrow more and that will be good for the credit unions that are positioned to lend.