Although reports of tighter credit conditions continue to make headlines, preliminary second quarter data shows credit unions have more lending momentum in 2008 than they did a year ago. Credit unions in Callahan’s First Look program report solid loan growth of 8.9 percent over the past year, up from the 7.0 percent growth rate this group posted at midyear 2007. First Look credit unions account for $204 billion in assets, or approximately 25 percent of the entire industry.
Second quarter results from two of the largest credit unions in the country, Pentagon FCU ($12.2B, Alexandria, VA) and SchoolsFirst FCU ($8.0B Santa Ana, CA), highlight how credit unions are continuing to meet members’ needs despite current economic uncertainty. Financial results are strong for both, but how they are achieving such results by delivering exceptional member value – is more noteworthy. This core value is particularly seen in two key areas: 1) the growth of the average member relationship over the past year, and 2) the percentage of income being returned directly to members via dividends.
Rise in Member Value Indicators
Pentagon’s combined average loan and share balances have grown 6.8 percent over the past year to top $26,000. SchoolsFirst’s average balances have risen a slower 5.2 percent but exceed$32,500 as of June 30 th. Considering the beleagured credit environment nationally, it is worth noting that the larger component of the increase in the average relationship at both credit unions is higher average loan balances. The average loan balanceis up over $1,000 at each credit union at a time when consumers are increasingly looking for not just credit, but credit at a fair price. Across all First Look credit unions, the average member relationship is up 4.1 percent over the past year.
On the savings side, both credit unions are giving back to members at a high rate. SchoolsFirst has paid 46.1 percent of total income directly back to members via dividends through the first six months of 2008, while Pentagon has returned 56.5 percentof income in the form of dividends. These compare to a First Look credit union average of 40.5 percent as of June.
2Q Performance Highlights
Pentagon’s growth has consistently exceeded industry averages this decade and is on pace to do so again in 2008. SchoolsFirst, located in an area hit hard by the housing market collapse, and primarilyserving teachers in a state with severe budget shortfalls, is continuing to post solid growth and financial performance. While not immune to the effects of the economic downturn in California, SchoolsFirst’s results remain strong.
| Pentagon FCU | SchoolsFirst FCU | |
| 12-month Loan Growth | 21.7% | 5.7% |
| 12-month Share Growth | 8.3% | 8.6% |
| 12-month Member Growth | 8.9% | 5.0% |
| Average Loan Balance | $14,040 | $15,356 |
| Average Share Balance | $12,151 | $17,215 |
| Delinquency | 0.3% | 1.0% |
| Net Worth/Assets | 9.1% | 10.7% |
| Return on Assets | 1.1% | 0.6% |
Callahan’s First Look program allows credit unions to compare performance data weeks before complete figures are released by NCUA. To participate in Callahan’s First Look program, simply email your 5300.xml file to 5300@creditunions.com.