ALEXANDRIA, Va. — Federally insured credit unions reported solid asset and share growth through the first half of the year, according to NCUA.
"As the financial markets fluctuate because of volatile subprime mortgages, thus far credit unions remain stable, experiencing some increase in mortgage and loan delinquencies and foreclosures, albeit on a relatively small scale," NCUA Chairman JoAnn Johnson commented. "Total real estate loans expanded 4.6% to $255.4 billion in the first half of 2007, as real estate loans delinquent two months or more grew from 0.34 to 0.44% and foreclosed real estate increased to $213 million, representing a small 0.08% of total real estate loans at June 30, 2007."
Fixed rate first mortgages increased 17.2% (annualized) while total balloon/hybrid first mortgage loans declined an annualized 9.0%. Total adjustable rate first mortgages declined an annualized 15.5%.
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In general, NCUA's Call Report data showed share growth overtaking loans through June 30, 2007. Loans were up 2.4% to $506.4 billion while savings jumped 4.8% to $630.3 billion. Except for a small dip in new auto loans, all major loan categories have grown in 2007. The prime share accounts grew across the board as well, led by money markets at 7.3% growth and share certificates up 7.1%. The loan-to-share ratio dropped from 82.2% to 80.3%.
Additionally, though lending increased, investments grew even faster at 5.5% to $142 billion. Federally insured credit union investments in corporate credit unions experienced the largest growth, expanding by over $6 billion from January through June 2007.
"While any increase is undesirable," Johnson acknowledged, "federally insured credit unions' loan delinquency ratio increased just one basis point, up from .68 to .69% during the first six months of 2007, which demonstrates that up to this point credit unions have not been significantly impacted by the current upheaval in the mortgage markets. I commend credit union managers and urge they remain vigilant stewards providing responsible lending based on solid financial underwriting."
Overall, assets increased 4.3% to $740.7 billion from $709.9 billion and net worth was up 6.26% from $8.9 billion to $84.5 billion. Membership in federally insured credit unions increased 1.0% to 86.6 million members.
NAFCU President/CEO Fred Becker remarked, "Credit unions' solid second quarter results, showing modest growth in all categories from assets to membership, demonstrate that credit unions continue to provide a stable and valuable financial resource for the American consumer. We are especially pleased to see that credit unions are weathering the current downturn in the housing market quite well, with delinquency ratios remaining low."
He also noted the FDIC's positive report on banks that was issued the same day. "Kudos to banks, as well, for once again chalking up near-record earnings in the second quarter. Banks' earnings this past quarter–the fourth-best ever–offer yet one more sign that the nation's for-profit financial institutions are not hampered in any way by credit union competition. As we have stated many times before, the bankers' claims of unfair competition ring hollow with earnings results like these."
The FDIC reported bank and thrift net income of $36.7 billion in the second quarter of 2007, $1.3 billion below a year ago.
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