As record growth starts to ease up, it is clear that some credit unions are pulling back on member business lending activity.
Year-to-date, MBL portfolios are up just 1.7%, according to the October issue of CUNA Mutual Group's Credit Union Trends Report. Revised data indicated that member business loan growth slowed to 7% at the end of August.
Total loan growth is less than half of the 2008 pace and roughly a third of its 10-year average annual gain. Through the first eight months of 2008, loans were up 5.1%; in 2009 YTD gain is just 1.7%. In August, $3.8 billion or 38% of the YTD increase occurred that month with all loan classes up except second mortgages. The combination of loan payoffs and first mortgage loan sales are just under new originations, which may mean total loan growth will remain low, the data showed.
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"Now more than ever, CUs need the additional spread income lending provides, but can't afford the interest rate risk of historically low yields on fixed-rate first mortgages," wrote CUNA Mutual Chief Economist Dave Colby.
Meanwhile, "positive revisions" in vehicle loans were offset by lower estimates for real estate-secured loans, credit cards, and unsecured loans. The net effect was no change in loan growth trends, according to the report.
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