Improving Loan Losses, New Auto Loan Growth Fuel Strong Credit Union Earnings

The National Credit Union Administration’s just-released 2012 credit union data confirm that the trends the Credit Union National Association had reported on throughout 2012 continued in fourth quarter, and that 2012–from almost every vantage point–was the best year for credit unions since before the start of the Great Recession in 2007, according to a CUNA economist.

Loan originations and new-auto loans saw dramatic increases, and loan-loss provisions declined last year, Mike Schenk, CUNA vice president of economics and statistics, told News Now.

“Overall, credit union loan originations totaled a record $329 billion in 2012–a 27% increase over 2011,” Schenk said. “Strong mortgage refinancings helped to drive those results. In addition, new auto balances increased dramatically–reflecting a resurgent auto industry and lots of pent-up demand.”

Another highlight of the NCUA report was that credit union loan-loss provisions declined 14 basis points because of an improving economy and falling credit union chargeoffs, Schenk said.

“All in all, most of the metrics we follow show that overall credit union operating results have returned very close to normal,” Schenk explained. “However, the results are not uniform–not all credit unions are benefiting to the same degree from the improving economy and improving labor markets. In particular smaller credit unions are showing results that lag the movement-wide norms. For example, smaller institutions are more likely than their larger counterparts to have reported weak earnings and relatively low loan and membership growth.”

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