Credit unions turned out an impressive performance in 2013. As the country rebounds from the recession, credit union lending growth is outpacing share growth and the industry is turning its focus to consumer loans as the mortgage market cools. Like their national peers, credit unions in Kansas posted solid financial performance and even exceeded some national trends. For example, the state’s credit unions posted annual outstanding loan growth of 9.0% in 2013; that’s 1.1% higher than the 7.9% national average.
The Kansas Economy
Kansas’ economy is providing a solid foundation for its local financial cooperatives. Unemployment in Kansas dropped 70 basis points from December 2012 to 4.9% at the end of 2013. By comparison, the national average as of year-end 2013 was 6.7%. According to the Kansas Association of Realtors, the number of homes sold in Kansas during 2013 increased more than 9% from 2012. That’s in line with the national average, where year-end home sales were up 9.1% from the seasonally adjusted annual rate of sales in December 2012, according to the National Association of Realtors.
Lending And Originations
During 2013, Kansas credit unions increased total originations 3.6% over 2012, reaching more than $2.0 billion. Consumer loans alone, primarily auto and credit cards, accounted for $1.5 billion in Kansas. This is up $113.9 million, or 8.5%, over 2012. By contrast, the state’s credit unions reported $410.3 million in first mortgage originations in 2013, which is a 12.0% decrease from 2012. However, this mirrors national trends. Rising rates in the second half of 2013 contributed to a decline in originations and a cooling of mortgage lending across the country.
ANNUAL LOAN ORIGINATIONS BY COMPONENT
Data as of December 31, 2013, for Kansas Credit Unions
© Callahan & Associates | www.creditunions.com
Source: Callahan & Associates’ Peer-to-Peer Analytics
Kansas’ 2013 net interest margin of 3.23% is higher than the 2.81% national average. In 2013, Kansas credit unions reported an average loan yield and average investment yield of 5.42% and 1.22%, respectively. Despite the fact these are higher than national averages — 5.02% and 1.14%, respectively — both loan and investment interest income fell annually from 2012. Ultimately, the state’s increase in non-interest income, which includes fee income and income from mortgage sales, helped drive a slight increase in revenue in 2013.
Membership at Kansas credit unions increased 2.2% over the past 12 months to reach 642,343 members at year-end. Kansas credit unions added 13,861 members during 2013; that’s 1.5 times higher than the number of new members reported in 2012. The average member relationship also increased annually, up to $12,694 as of December 2013. This metric, which includes the total dollar amount of loan balances and deposits per member, is an increase of 4.3% over the $12,167 reported in December 2012 by Kansas credit unions.
The past year’s performance shows how Kansas credit unions have positioned themselves for success in 2014. As they continue their member focus into the coming year, they will remain strong forces in their local markets.