This month Sen. Charles Schumer of New York introduced a bill that would require
mortgage lenders to “act in the interest of borrowers.” Credit union
leaders must find it ironic that legislation is needed for something that their
industry does every day. In fact, recent headlines about non-prime mortgage programs,
credit cards and student loans accentuate the enormous opportunities for credit
unions in today’s market. Evidence that credit unions are realizing some
of these opportunities is apparent in first quarter results. Highlights of the
first quarter include:
- Members directed an additional $25.6 billion in new shares to their credit
unions in the first quarter of 2007. While
certificates accounted for virtually all of the gains in 2006, the first quarter
saw increases in all deposit categories.
payments rose 38 percent versus first quarter 2006. Over the past 12
months the cost of funds has jumped 71 basis points, the fastest jump in that
timeframe in over a decade.
- The $506.6 billion loan portfolio rose by just $1 billion during the first
three months of the year, compared to a $4.5 billion rise in first quarter
2006. Lending activity has not materially slowed however. The difference is that refinancing activity is a larger
proportion of loan originations this year.
- Despite a slowing housing market, credit union first mortgage activity remains
solid. First mortgage balances are up $3.3 billion in the first three months
of 2007 with origination volume of $12.1 billion up slightly vs first
- The auto market slowdown can be seen in auto
loan balances, which declined slightly in the first three months of the year
to $178.7 billion.
- Credit card balances are up 12.5 percent over the past year, reaching $26.4
billion as of March 31.
- Income before dividends jumped 24.5 percent versus
first quarter 2006, but net income declined 5.9 percent as credit unions raised member dividends.
- Capital levels remain strong with an 11.3 percent industry net worth
to assets ratio as of March 31.
The strong balance sheet is just one aspect of credit unions’ advantageous
position in the market today. In an environment where daily headlines remind
consumers of the financial traps that are prevalent in the market, credit union
values can provide a real competitive advantage. Ensuring the market sees, hears
and recognizes that value will be the key to credit unions realizing the opportunities