The $20M to $50M peer group of credit unions offers a good mix of business models to evaluate whether small credit unions that grant first mortgages perform differently in terms of financial performance and member value. Read on for a peer group comparison evaluating whether credit unions that grant first mortgages perform differently than other credit unions in this peer group. Then, use this article as an example and apply your own data and peer groups to create similar, customized analysis.

Third quarter data for 2011 is in, and the numbers reflect an industry that is committed to promoting economic prosperity in communities across the United States. Credit unions are lending despite the broader economic conditions, are reaching disenfranchised consumers, and are returning value to their member-owners. Credit unions recorded their highest ever market share for first mortgage originations. At 6%, year-to-date market share for first mortgage originations is even greater than that recorded at the trough of the recession, when credit unions were one of the few financial institutions still actively lending.

Read the rest of the article and see supportive graphs here!

The nation's credit unions had strong performance in the third quarter, according to initial FirstLook trends from slightly more than one-third of the industry. Read our article for highlights from more than 2,900 FirstLook credit unions that have reported their third-quarter finances.

See the FirstLook 3Q11 trends here!

Financial data from credit unions in the second quarter offers several key trends that may help credit unions better plan their next financial moves. Total revenue, which was up $165 million, in credit union land has been positive for each of the past six years with net interest income, fee income and other operating income all up compared to the same quarter in 2010, says Callahan & Associates' analyst Lydia Cole.

Read more and view a short video on highlights from the second quarter.

Preliminary financial results show credit unions continued to serve their members despite turbulent market activity, ongoing government strife, and international conflict in the second quarter of 2011.

Nine graphs from Callahan & Associates’ second quarter FirstLook data for more than 7,100 credit unions, representing 98.5% of industry assets, show member growth and loan growth improving as well as many areas of credit union activity picking up.

The charts reveal that reserves are continuing to improve in relation to delinquency and that provision for loan losses are declining as credit unions are in a better position to underwrite increasing net income because of improvements in asset quality. Scroll through the slideshow to see more noteworthy trends in the second quarter.

Lending is a concern for most credit unions. Data on 3,200+ credit unions show that annual loan growth has picked up in the second quarter of 2011 since a low point in the third quarter of 2010. These credit unions posted year over year growth in outstanding loan balances of 40 basis points. The same group had annual loan growth of -0.03% as of March 31.

These credit unions posted loan originations of $39.8 billion in the second quarter, up from the $39.2 billion in the first three months of 2011. Second quarter originations are up 4.2% from originations granted in the second quarter of 2010.

While first mortgage originations show continued strength, it may be a relief to some to see consumer loan volume pick up, at least slightly. Consumer loans accounted for 59.5% of total loan originations through June 30, 2011 for this FirstLook group of credit unions. Consumer loans originated YTD increased 13.7% over 2010 figures for the same period.

While the origination detail for consumer loans isn’t reported, key areas of the loan portfolio outstanding grew, including used auto loans, first mortgages, and credit cards. As with recent quarters, new autos and other real estate loans shrank. However, new autos, down 13.8% in March have started to recover slightly. Balances are down 11.6% year over year in June.

With more than 95% of the industry's assets reporting, credit unions posted an earnings increase in 1Q11. These credit unions had an annualized year-to-date ROA of 0.74% in the first quarter, an increase from 0.50% for the same period last year. The 24-basis point improvement represents a return to the level of ROA that credit unions achieved prior to the recession.

Net income grew 56.7% from 1Q10. The increase in net income came primarily from a 23.7% decrease in dividends as well as a 32.3% drop in provisions for loan losses. Credit unions have adapted to a new environment by managing their cost of funds and asset quality.

Read the full article

The U.S. economic recovery took hold in 2010. Gross domestic product grew 2.8% during the year, a significant shift from the 2.6% decline posted in 2009. Perhaps most significantly, the increase was driven by consumer and business spending - not government spending. The ongoing stream of positive economic data has led both private and Federal Reserve economists to up their projections of 2011 U.S. growth in recent months.

Faster growth has pushed unemployment down, with the unemployment rate falling from 10% at year-end 2009 to 9.4% at year-end 2010. The downward trend accelerated in the three months ended February 2011 as the rate dropped nearly a full percentage point over the period to 8.9%. This marked the fastest improvement in the unemployment rate in nearly 28 years and, with over two-thirds of industries tracked by the Labor Department adding jobs, the most broad-based gain in Credit Unions Enter 2011 with Momentum employment since 1998.

Read the full article via CUSP eBook.

Member business lending is a solid component of the credit union loan portfolio. According to data from Callahan & Associates' FirstLook program, credit union member business loan balances stood at $30.5 billion in September. This is an increase of 9.1% from the previous year.

Credit unions added more than $2.5 billion in new business loans to the industry portfolio over the past 12 months. Business lending is at the forefront of credit union loan growth, as its rate of increase over the past year is greater than that of any other loan category. As MBL growth outpaces the other loan categories, it plays an increasingly important role in the overall loan portfolio. The concentration of member business loans has more than doubled over the past six years; however, at 5.4% it still represents a relatively small portion of credit union lending.

Does your credit union offer member business lending? How does your MBL growth compare to credit unions like yours and across the nation? How do your loan originations overall compare to your peers?

Open Peer to Peer now to run this crucial analysis. Loan growth is still an important issue in 3Q 2010. You can also read the full article on creditunions.com.

Credit unions, without government assistance or prompting, have officially reported 47,165 modified mortgages, with just over $9.3 billion outstanding in modified mortgage loans. In the first six months of 2010, credit unions modified $3.36 billion in real estate loans. Ranging in asset size from $2M to well over $5B, 1,665 credit unions in all 50 states (and the District of Columbia) have extended their community reach and modified member mortgages.

Call report data on modified mortgages has been available for the past few years. We've put together five graphs showing how you can use the data to examine your modified mortgages against peers. Because the data is relatively new, the majority of the graphs will show flat up until the third quarter of 2008.

Download the Mortgage Modification .CRC and then learn how to import the file in Getting Started.

See how your mortgage modifications metrics compare to your peers today.

Mid-year data reveals several interesting trends in credit union performance. Although loan demand continued to slow, key loan products such as credit cards and member business loans were growth areas in June. In addition to success on the balance sheet, credit unions maintained a close watch on their expense levels. Net income increased from 2009 mid-year reports.

Other Highlights for the end of June

• Assets increased 3.8% over the past twelve months to $916.1B
• Credit union loan originations totaled $112.1B in the first half of 2010, down from last year's record pace.
• Credit unions are selling nearly half of their first mortgage originations to the secondary market. Secondary market sales through the second quarter totaled $15.1B
• Delinquency has declined over the past two quarters to 1.74%. As delinquency falls, the coverage ratio (Allowance for Loan Losses/Delinquent Loans) has increased to 93.2%
• Share balances increased 5.7% over the past 12 months, led by money market deposits
• More than 200,000 members have joined a credit union since June 2009, bringing total membership to 91.7M.
• Net income is up 66.3% annually through the second quarter
• The net worth to assets ratio stands at 9.9% as of June

2Q Economic Trends

• The Federal Funds Target Rate has remained at the historic low range between 0-25 basis points since December 2008
• Existing home sales increased 9.8% from totals reported in June 2009. This growth represents the last of the First Time Home Buyer Credit, and analyst forecasts expect sales to slow in the second half of the year
• Auto sales are back on the rise, up 16.7% through the first 6 months of 2010
• Outstanding consumer credit declined by 3.2% in the second quarter. While non-revolving credit has held constant, revolving credit continues to decline
• The personal savings rate has declined to a preliminary 6.1% in June, still high, but down from the revised 7.2% in the previous year

Review the 2Q 2010 trends in more detail. Then compare your performance to your customized peer groups with Peer to Peer. How do you stack up? Many of the data points shown in the Quarterly Report are in the 230+ built-in displays in Peer. Start your analysis now!

As preliminary results become available for the second quarter of 2010, it appears as though the struggling loan growth reported in the first quarter of the year has remained weak. As consumers remain timid about the economy and competition returns to many of these lending markets, the credit unions that comprise Callahan's FirstLook Program saw their loan growth remain relatively flat, up just 14 basis points year over year.

However, while growth in the overall portfolio remains flat, certain components and loan offerings continue to experience success. Perhaps the most obvious of those successes is member business lending. As of the end of June, the 7,434 credit unions included in the FirstLook program reported total outstanding member business loan balances of $29.6 billion. This represented an increase of 9.5% from the balances these same credit unions reported in the previous June, making business loans the fastest growing component of the credit union loan portfolio.

One of the major factors in this growth has been the current economy. As the unemployment rate rose, many individuals were left without employment in a market where few companies were hiring. This provided a catalyst that resulted in an increase in the number of individuals looking to start small businesses. In addition to, and perhaps in response to, this increasing demand for small business financing, we also saw an increase in the number of credit unions offering this loan product. Of the FirstLook credit unions, 27.8% reported outstanding business loans on their books, an increase from the 26.5% of credit unions offering this product in the previous June.

MBL and Peer to Peer

Peer to Peer contains several built-in displays relating to member business loans:

Download the New MBL Custom Report

You can also download a custom display for member business lending. Visit Custom Reports to review the newly available MBL graphs. See Spotlight for more information on unfunded commitments.

At the end of first quarter 2010, regardless of the NCUSIF stabilization expense, credit unions' operating expense ratio was equal to or below its lowest point in the past five years. Calculating the expense ratio has historically been straightforward - annualized operating expenses divided by average assets - but the NCUSIF stabilization expense has created a trickier formula.

By excluding the NCUSIF stabilization expense, Callahan & Associates measures operating expense ratios in a way that is more representative of expenses incurred from conducting business. By comparison, the NCUA ratio includes the NCUSIF stabilization expense in its Financial Performance Reports. Either way, credit unions' operating expense ratios are below or equal to their lowest point in the past five years. 

A major contributing factor to the decline in credit unions' operating expenses is asset growth outpacing operating expense growth. Total assets grew at a rate of 4.7% between 1Q 2009 and 1Q 2010, while operating expenses grew at a rate of only 2.6% over the same period. Although that is not to say credit unions haven't been making positive strides in managing their expense levels, as they have cut back on travel and conference expenses and marketing expenses.  

You can easily manage and benchmark your expense levels at your credit union through Peer to Peer. Here are some tips to ensure accurate analysis:

• Make sure you are using an appropriate peer group when considering expenses. The correct group may not be your standard peer group. Use credit unions with similar branch networks, staffing levels, and locations. See User Tips for more information on creating custom peer groups.

• Know how the NCUSIF and Corporate Credit Union Stabilization expenses affect expense levels. Read more about this topic on creditunions.com: Operating Expense Hits Record Low and The NCUSIF Expense Rears its Head Again in 2010.

The NCUA has recently stated in a letter to credit unions to expect a stabilization assessment totaling 13.4 basis points (or 0.134%) of insured shares as of March 2010 for the Corporate Credit Union Stabilization Fund. A second assessment in 2010 for the National Credit Union Share Insurance Fund is expected this fall.

In the letter to credit unions, the NCUA estimated the affect of the assessment on key financial metrics of credit unions:
If first-quarter earnings trends continue for the remainder of this year, this assessment would cause about 10% of credit unions that otherwise would have been profitable in 2010 to report negative earnings.

How can you use Peer to Peer to understand the affect of the assessment on your business? Peer to Peer accepts mathematical calculations in custom displays so you can:

1. Estimate the value of the Assessment
2. Add in the Cost of Insurance (the estimated assessment) to the credit union's Cost of Funds
3. Display the Assessment as a piece of the credit union's Operating Expenses
4. Graph the growth of Insured Shares and the growth of Uninsured Shares to see how a changing share mix may affect future premium amounts
5. Discover if your peer credit unions have been accruing for the expense and if so, in what account code

Preparing for the Assessment

A few weeks ago, Callahan & Associates' senior analyst Nick Connors covered how credit unions were preparing for a future NCUSIF assessment. Some credit unions were accruing for a future expense in a variety of account codes. Others were not specifically reserving funds for an assessment. Read the full article on creditunions.com.

Estimate Your Assessment with Peer to Peer

Open Peer to Peer to find out what your stabilization expense will be. In the User Tips section, we walk you through how to make a custom display to calculate your expense.

Asset quality is improving at credit unions as delinquency and charge-offs turn the corner in this post-recession economy. Further, stronger allowances and positive trends in the one-to-two month delinquency rate signify credit unions have less to fear from potential loan losses in 2010.

According to Callahan & Associates' FirstLook program, which includes data from 98% of the industry by assets as of March 31, 2010, the delinquency and net charge off rates fell 6 basis points - to 1.76% - and 2 basis points - to 1.19% - respectively. This week, analysts cover three topics in asset quality on creditunions.com:

• National Trends: The quarter-over-quarter decline signifies a return to seasonal asset quality trends.
• State Trends: In 22 states - or nearly half the country - both delinquency and charge-off ratios decreased.
• Credit Union Example: Credit unions' willingness to consider the reasons behind modification requests can lead to a healthier loan portfolio.

You can analyze your asset quality with Peer to Peer. In fact, there are now 230 account codes that relate to delinquency and charge-offs. See our User Tips for more information and to download the related custom .CRC file.

During the recession, the automotive industry was one of the hardest hit market segments. However, as the economy recovers, so does the auto market, and as vehicle sales are on the rise, so too is the demand for auto loans.
Credit unions are making their presence felt at the dealerships, and the number of credit unions that offer indirect lending to their members is increasing.

Through the end of 2009, credit unions reported $76.4 billion in indirect loans on their balance sheets. This represents not only a record high volume of indirect loans for credit unions, but also an 8.4% increase in balances over the past two years.
How do your indirect lending numbers measure up? Find out with Peer to Peer by running the displays in the built-in Auto Loan Portfolio (found in the "Assets" category of Select Your Report or Graph). Most notably, check indirect auto loans/total auto loans and indirect loans outstanding by type.

Changes to Regulation E will become effective before you know it. Callahan & Associates recently completed a non-interest income survey of 150+ credit unions. Here are some preliminary figures:

Credit unions participating in our survey reported that overdraft fees comprised 28.1% of total non-interest income. In 2009, such fees accounted for about $3.26 billion in income for the industry.

How will these changes affect your non-interest income? What can you do to reduce the effect Regulation E changes will have on your income statement? Download the Non-Interest Income Custom Report to run your non-interest analysis today, and read the full article at creditunions.com.