The Best Year Ever?

3 themes dominated headlines in 2009: lending, asset quality, and earnings. And leaders in each of these categories demonstrate they may have just had the best year ever.

 
 

Industry officials and trade publications are reticent on proclaiming success in 2009. In a system with 7,700 plus institutions, there will be divides. There's no denying some credit unions have struggled, however, severe troubles are few for many organizations. And for another subset of the industry, it was one of the best years ever. Three themes dominated headlines in 2009: lending, asset quality, and earnings. We've highlighted 10 credit unions – five with more than $250 million in assets and five with less than $250 million in each of three categories: Growth in Loans Originated Year-to-date, Delinquency, and Core Earnings. The results may surprise you.

We did put certain restrictions: credit unions that had a merger in 2009 were eliminated; credit unions in the Growth in Loans Originated YTD must have had at least $1 million in loan originations in 2008; and credit unions in the Delinquency group must have a Loans/Shares ratio of 50% or more and a minimum of $1 million in originations in 2008 and 2009.

Lending

12-Month Growth of Loan Originations - Credit Unions Under $250M

Name

State

Total Assets

Growth in Loans Originated YTD

2009 Loan
Originations

2008 Loan
Originations

Loans/Shares

Sioux Empire

SD

$78,858,614

563.75%

$167,298,840

$25,204,970

84.74%

Seaport

MA

$61,279,216

532.40%

$11,582,677

$1,831,540

104.45%

Community Driven

MI

$55,892,905

477.91%

$17,604,297

$3,046,214

61.80%

Catholic & Community

IL

$93,970,242

300.56%

$19,969,047

$4,985,344

49.40%

Secure

MA

$20,901,111

299.10%

$4,044,455

$1,013,395

64.71%

Stand out credit unions in our $250M in assets or less group were all under $100 million, but they all tripled or quadrupled their loan originations from 2008 levels. Originations were generally smaller amounts but these credit unions extended credit to members in need. Sioux Empire's origination volume was more than double their asset size. Fueled by $137 million in real estate originations, Sioux Empire sold $123 million of the originations to manage interest rate risk. The push in lending also helped it gain 637 new members – a 7% annual growth.

Community Driven, created from a merger of Automotive FCU and MPG Community in 2008, used the merger momentum to expand in 2009. Outstanding loans increased 50% at the institution, mostly in auto.

The large counterparts didn't grow at the same astronomical rates, but they still more than doubled originations over the past year. Bank-Fund Staff posted $817 million in first mortgage originations, 73% of its total volume for the year. Similarly refinancing fueled total loan originations at many of its peers. These credit unions were more likely to sell conforming loans but retain servicing.

12-Month Growth of Loan Originations - Credit Unions Over $250M

Name

State

Total Assets

Growth in Loans
Originated YTD

2009 Loan Originations

2008 Loan Originations

Loans/Shares

Bank-Fund Staff

DC

$2,828,154,643

151.46%

$1,125,199,416

$447,467,698

74.51%

Teachers

NY

$3,643,801,205

139.01%

$1,445,059,763

$604,600,695

45.77%

IDB-IIC

DC

$359,720,926

130.84%

$96,866,602

$41,963,324

65.01%

Advancial

TX

$895,952,054

128.55%

$530,261,842

$232,011,095

86.97%

University

CA

$413,213,316

122.05%

$87,150,863

$39,247,915

69.10%


Earnings

Core Earnings Ratio - Credit Unions Under $250M

Credit Union

St

Total Assets

2009 Core Earnings Ratio

2008 Core Earnings Ratio

Fee Income / Total Income

Dividends / Total Income

CommunityWide

IN

$212,081,266

4.66%

3.98%

7.87%

20.36%

Southern

TX

$48,815,161

4.12%

4.20%

2.39%

22.30%

Members 1st

CA

$97,666,743

3.79%

3.65%

11.66%

12.91%

SD Medical

CA

$60,750,802

3.62%

2.85%

8.02%

14.84%

My Community

TX

$209,423,076

3.60%

3.73%

26.22%

17.38%

The core earnings ratio calculates the return on the credit union's core business. To calculate: (net interest income + provision for loan losses + fee income + other operating income – operating expenses)/average assets. It was designed to compare credit union business models by minimizing the affect of outside influences, extraordinary gains or losses, and, now, the NCUSIF stabilization expense. Credit unions in both these groups serve wide geographic areas, including the beleaguered "sand states." Some of these credit unions have been hit hard by the economic recession, corporate write-downs, and the stabilization expense, but the core business remains sound.

Core Earnings Ratio - Credit Unions Over $250M

Credit Union

St

Total Assets

2009 Core Earnings Ratio

2008 Core Earnings Ratio

Fee Income / Total Income

Dividends / Total Income

Arrowhead Central

CA

$851,760,722

3.70%

2.56%

14.75%

6.16%

Arizona

AZ

$1,464,396,008

3.62%

3.22%

18.21%

14.82%

Consumers

MI

$323,394,465

3.27%

2.90%

26.34%

15.06%

Progressive

NY

$516,617,625

3.22%

3.09%

0.96%

26.35%

Potlatch No 1

ID

$412,533,219

3.08%

2.13%

19.50%

24.66%


Asset Quality

Delinquency - Credit Unions Under $250M

Credit Union

St

Total Assets

2009 Delinquency

2008 Delinquency

Loans/Shares

Net Charge-offs/Ave. Loans

Southpointe

MO

$24,045,177

0.00%

0.14%

57.77%

0.03%

KUE

KY

$30,874,374

0.00%

0.17%

59.79%

0.14%

Construction

MI

$22,304,559

0.00%

0.03%

60.40%

0.06%

Federated Employees

MN

$40,523,344

0.00%

0.12%

63.03%

0.15%

Cannon

NM

$45,759,547

0.00%

0.07%

66.22%

0.19%

Credit unions in this category were concentrated in the Midwest and Southeast. Credit unions in the smaller asset-based peer group had no reportable delinquency as of December 31. For those credit unions, the year-end figures were an improvement over 2008 levels, which were still well below industry averages. Some of the credit unions charged-off loans they did not expect to return to on-time status. Credit unions in the larger category did post slight reportable delinquency, but all figures were significantly lower than industry and region averages. Additionally, all of these credit unions are lending to their membership. Strong ties, and a willingness to work with members who may be facing financial difficulties, helps suppress reportable delinquency.

Delinquency - Credit Unions Over $250M

Credit Union

St

Total Assets

2009 Delinquency

2008
Delinquency

Loans/Shares

Net Charge-offs/Ave. Loans

Evansville Teachers

IN

$769,279,173

0.11%

0.13%

66.02%

1.11%

Enrichment

TN

$407,786,100

0.11%

0.17%

73.44%

0.12%

Berrien Teachers

MI

$261,800,735

0.11%

0.11%

81.48%

0.10%

Tennessee Valley

TN

$686,774,243

0.13%

0.11%

63.01%

0.49%

LGE Community

GA

$789,914,428

0.13%

0.09%

85.54%

0.80%

What other categories should we examine to rank year-end performance? Post your suggestions in the comments section below and we'll cover them over the course of the next month.

 

 

 

Feb. 18, 2010


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