Looking Back

HOBOKEN, N.J. — As credit unions now find opportunity in a struggling economy, Credit Union Times looks back 10 years ago when credit unions saw record growth in share drafts and first mortgages during volatile international and domestic markets and low consumer confidence.

For the first time share draft deposits at credit unions showed double-digit growth in 1998, growing 10.2% for the year ended June 30 to reach $38.7 billion, up from $35.2 billion at mid-year 1997. The number of credit union share draft accounts also increased from 35.8% to 37.5%.

First mortgages approved by credit unions rose 102% as of June 30, 1998. Total fixed and adjustable rate first mortgages reached $15.1 billion in the first six months of 1998, compared to $7.5 billion granted over the same period in 1997. At the time, that increase was the largest ever posted in the credit union industry.

At the time Chip Filson, president of Callahan and Associates said, “in the midst of consumer uncertainty over the economy, credit unions have become an oasis for safety and soundness.” All 1998 data in the article, “CU Share Drafts and Mortgages Climb in Softening U.S. Economy,” came from Callahan (CU Times, Oct. 21 1998).

Small and mid-sized credit unions also saw growth during economic uncertainty in 1998. Among the top 25 credit unions in real estate growth five were less than $60 million in assets and three were between $60 million and $100 million in assets.

Filson attributed the growth in share draft deposits and first mortgages to members' increased awareness of credit union services as a result of bankers' attacks, the increased number of credit unions offering Internet home banking and credit unions' intensified efforts of cross selling services.

Filson also said that at the time credit unions were increasing their marketing efforts to encourage members to use more credit union services and make the credit union their primary financial institution.