Real Estate Asset Quality Improves Year-Over-Year

First mortgages added $36.3 billion to the total loan portfolio in 2018.

Real estate loans comprised nearly half, 49.4%, of the total loan portfolio as of Dec. 31, 2018. This past year, real estate balances increased 8.8%, from $478.7 billion in 2017 to $520.9 billion in 2018.

First mortgages increased 9.2% year-over-year, adding $36.3 billion to total loans. Aggregate balances reached $431.6 billion at year-end 2018. Although the real estate share of the total loan portfolio was down 11 basis points annually to 49.4%, first mortgages increased their portion of the portfolio 5 basis points to 40.9%.

Growth in other real estate increased 6 basis points year-over-year to 7.0%. This was the only loan product for which credit unions reported accelerated growth from 2017. Despite being the only major loan product with accelerating growth, the share of the overall loan portfolio held by other real estate declined 16 basis points year-over-year. As of year-end 2018, other real estate balances at credit unions was $89.3 billion8.5% of the overall loan portfolio.

Credit unions in the U.S. tend to favor fixed-rate mortgages, which comprised 56.8% of all first mortgage loans in the fourth quarter of 2018. Comparatively, adjustable-rate and balloon/hybrid mortgages accounted for 14.4% and 28.8%, respectively. Although balloon/hybrid mortgages comprised only 28.8% of the first mortgage loan portfolio, with 14.8% year-over-year growth, they were the fastest-growing mortgage category. Adjustable-rate first mortgage loans grew 5.7% annually, whereas fixed-rate balances expanded 7.4%.

How Does Your Real Estate Portfolio Compare?

With nearly 50% of the total loan portfolio being comprised of real estate loans, are you curious where you rank amongst your peers? It takes minutes using Peer-to-Peer to see how you stack up.

Credit unions reported the lowest delinquency of all loan types in real estate. First mortgage delinquency fell 7 basis points year-over-year to 0.55%. That’s 1.7 percentage points lower than the year-end, post-recession high recorded in 2010. Other real estate delinquency improved 4 basis points in 2018 to finish the year at 0.52%.

Credit unions financed 8.5% of all mortgage loans nationwide as of Dec. 31. Although first mortgage originations were down 1.2% in the past year, consistent with national mortgage production trends, market share was up 23 basis points.


Callahan & Associates |
Rk. Credit Union St. 12-MO Growth 1st Mtgs.** 1st Mtgs.
/Total Loans
1st Mtg. Delq. 1st Mtg. Orig. (past 12 months)** Total Assets
1 MEMBERS1ST COMMUNITY IA 77.04% $44,131,052 38.52% 0.01% $15,607,119 $169,759,406
2 DUKE UNIVERSITY NC 75.34% $23,783,466 28.90% 1.20% $4,729,733 $143,652,568
3 OREGON COMMUNITY OR 65.00% $401,535,101 25.47% 0.09% $225,766,877 $1,708,440,591
4 SOUTH METRO MN 63.55% $34,996,524 39.57% 0.73% $10,386,865 $116,098,586
5 SOUTH JERSEY NJ 62.69% $108,984,668 41.52% 0.83% $10,433,357 $366,944,000
6 COMMUNITY 1ST* WA 62.51% $9,785,913 9.92% 1.69% $1,414,700 $144,682,637
7 AMERICA’S WA 60.42% $131,893,869 28.22% 0.00% $64,848,915 $591,877,937
8 PACIFIC SERVICE CA 56.90% $286,793,046 39.69% 0.00% $108,106,742 $1,153,544,189
9 BRIGHTSTAR FL 55.61% $98,272,684 27.39% 0.00% $29,877,180 $481,736,746
10 ST. LOUIS COMMUNITY* MO 55.22% $36,528,396 20.81% 0.00% $17,723,271 $282,198,946

* Merged in the past year.
** Credit unions with >$3M in first mortgages outstanding five years ago, >$1M in first mortgage originations each of the past three years, and >$5M in first mortgages outstanding this year.

Case Study: Keeping Things Calm In A Category 4


Data as of 12.31.18

HQ: Lake Jackson, TX
MEMBERS: 303,418
ROA: 1.11%

Hurricane Harvey dropped a record amount of rain in and around southeast Texas. Nearly five feet in some spots. The August 2017 storm also gave TDECU ($3.3B, Lake Jackson, TX) the opportunity to respond by setting a high standard for responding to disaster.

An estimated half-million vehicles and 35,700 homes in nine Texas counties were damaged or destroyed by flooding from the wettest storm ever recorded on U.S. soil. TDECU says approximately 30% of its membership was affectedcounting cars, houses, and jobs and the big Houston-area cooperative vowed to keep 100% of them in their homes.

Hurricane preparation is a fact of life at TDECU. Three days before Harvey hit, the credit union activated its business continuity and disaster plan, which included moving staff from IT, accounting, call center, cards, and more to Dallas so the cooperative could remain operational.

We never lost our card system, says CFO Rhonda Pavlicek. ATMs were up, and our credit and debit cards worked 100% of the time. The call center was up so members always had full financial support.

A lot of people, however, did lose a lot. In response, TDECU didn’t charge late fees for the first 60 days after the storm. It also offered emergency loans of up to $5,000 and forbearances in 90-day installments for up to a year.

We made 60,000 loan extensions in our auto loan portfolio and agreed to 1,000 mortgage forbearances, Pavlicek says. Once they come out of the forbearance, we had to make sure they could repay. We created a loan modification team to modify and re-adjust members’ loans because we knew members were going to reach out with this request.

Only one loan appeared headed for default as of mid-May last year, and TDECU continues to monitor its risk mitigation.

We were there for our members, Pavlicek says. And they have been able to repay us.

How Does Your Membership Growth Compare?

Credit union membership reached 117.6 million members at the end of 2018. How does your membership growth compare to peers? Find out today.


May 20, 2019

Keep Reading

View all posts in:
More on:
Scroll to Top
Verified by MonsterInsights