Callahan & Associates report that the credit union industry is smashing loan records, posting a 31% growth in originations during third quarter 2012.
Since 2007, credit unions have originated more than 105 million loans, amounting to $1.5 trillion. “The idea of the cooperative model is to fill a void in the marketplace, to be countercyclical,” Jay Johnson, EVP/Callahan & Associates states in a press release. “Over the past few years we’ve seen that, and members are continuing to find value in their credit union.” Callahan & Associates is a trend tracking and data provider to the credit union industry.
Based on historical data and future outlook, Callahan doesn’t see the loan train slowing anytime soon. The firm predicts that lending activities will continue to increase well into 2013, “as credit unions identify new ways to meet their members’ needs in areas such as mortgage and student lending.”
According to Rita Gentry, President/CEO of Telco Community Credit Union ($77.2 million, Asheville, NC), old-fashioned service and meeting member needs is what is helping to build momentum.
“2012 has been a great year for Telco Community Credit Union, we have membership increase of 10% and 16% increase in total loans over last year,” she explains. “We contribute that to a multitude of things; including, folks being fed up with banks, member loyalty; great service and loan specials that we run throughout the year. There’s no one thing that I can point to but it’s a combination of things. You first have to provide great member service, then get the word out and they will come. There’s no ‘secret’ weapon.”
Credit Unions: Meeting Member Loan Needs
While there may be no secret weapon, credit unions across the country are finding intuitive ways to meet members’ evolving requirements.
For example, when Tropical Financial Credit Union ($866 million, Miramar, FL) knew that members were in a pinch to afford gifts this holiday season, the credit union developed a “Black Friday” loan special that ended up far exceeding its expectations. Members were offered a no credit check loan for $1,000 to use throughout the Black Friday weekend.
Amy McGraw, VP/Marketing said that her stretch goal was to see 300 loans, however the credit union ended up getting well over 500. “The deal was no payments until January 2013, no origination fee and the member only has to make 12 monthly payments of $92.”
She says with a rate of 16.99%, she wondered if members would be interested, considering they could tap into their Visa for a lower rate. “However, what may have been most attractive to members is that it allowed for controlled spending. You left the credit union with cash in hand, never having to touch your credit card.”
She says this loan could work in other instances such as during back to school too. Some requirements included the borrower had to be a member in good standing for at least six months and have a Tropical Financial checking account with automatic payments. Members also had to provide proof of income.
For Point Breeze Credit Union ($671.2 million Hunt Valley, MD) auto loans have been extremely hot. Genie Briggs, VP/Marketing and Business Development, reports that the credit union experienced a 7% growth in automobile lending. “We are currently offering rates as low as 1.99% for both used and new vehicles,” she says. “This includes motorcycles and RVs as well.”
Mortgages Continue to Dominate Loan Growth
Many credit unions like Kinecta Federal Credit Union ($3.12 billion, Manhattan Beach, CA) are having a tough time keeping up with mortgage loan volume. In October, Kinecta reported a record mortgage volume of just over $3 billion, surpassing volume in 2011.
"The mortgage market is showing marked improvement and with that we have been able to offer significant benefits to our members," Joseph Whitaker, EVP/Chief Operating Officer says in a press release. "Kinecta offers competitive low rates and a broad product menu and we will continue to do so as we move forward, continually growing as a national mortgage lender."
Like Kinecta, McGraw says that Tropical Financial has seen mortgage volume go through the roof. “Both purchases and refinances have done extremely well,” she says. The credit union recently added a new mortgage component, CU Realty Services, which provides exclusive home shopping assistance, partners buyers with a pre-approved agent and helps members save money through special rebates.
Looking for a loan geared to your specific needs? Find a credit union and inquire about its menu of loan services.