Now more than ever, being attuned to the local employment climate and other trends may help credit unions boost stalled loan portfolios.
In offering that advice, CUNA Mutual Group Chief Economist Dave Colby said he is not expecting the economy to provide a lift to credit union lending for the next two years.
“Rather, credit unions can grow loans by leveraging local knowledge of employment conditions and collateral valuation trends,” Colby suggested. “Well-underwritten, fairly priced local lending will help members, improve the economic prospects for the communities credit unions serve and boost net income.”
Year-to-date through July, credit unions have yet to regain their seasonal loan peak, Colby said.
At $580 billion, total loans were down 0.3% over the past year, according to CUNA Mutual’s September Credit Union Trends Report.
First mortgages, used vehicles and home equity loans were the only portfolios up YTD and year-over-year, the data showed. Still, a combined decline of $15.3 billion in new vehicle and second mortgages could not be offset by gains in other portfolios, Colby said.
Real estate secured loans were up 0.1% YTD and 0.2% since July 2010.Total vehicle loans were down 2.0% and 0.3% YTD.
Mid-year data showed 59% of all credit unions reported loan portfolio declines over the past 12 months. Colby said this group held 47% of industry assets. Included in this group were 47% of the $1 billion-plus credit unions.
“With the yield spread between average loan and investment rates now at 413 basis points, searching out and granting member loans will help the nation’s credit unions replenish capital and build financial strength,” Colby said.