Credit Union Times - October 1, 2008 - (Page 8) NEWS It’s Not All Bad News in Credit Union Mortgage Circles By HEATHER ANDERSON CU Times Correspondent-at-Large WASHINGTON — Direct and indirect mortgage losses are hitting credit unions, but unlike banks, the latest financials report some good news, too. Topping the list of industry accomplishments revealed in Callahan & Associates’ second quarter Trendwatch report was an all-time high in loan originations, $134.2 billion as of June 30. Leading the charge was a 40% gain in first mortgage originations from June 2007. Bank lending standards have spiked, resulting in more mortgage denials, so applicants looking elsewhere are a big factor, said Callahan Executive Vice President Jay Johnson. And, he added, around 200 mortgage lenders have exited the market in the past year, so there are fewer competitors in the marketplace. But given the extremity of the bust in the mortgage and banking sectors, is 40% enough to brag about? Forty billion in originations is a nice leap from the typical $30 billion second quarter year-to-date numbers, but, it still represents less than 4% of mortgage market share. “Yes, it could always be better, but we’re seeing a big shift, unlike anything before, in terms of market share gain,” Johnson said. He pointed out that $40.6 billion originations year to date could mean serious gains by year-end, especially considering the first six calendar months of the year don’t include summer’s top real estate months. And, credit unions have seen a steady increase in originations every quarter for the past 18 months, while other lenders have seen originations fall. negative bank ROA. And, California numbers include “Is there room to grow? Yes, but credit unions aren’t two failed credit unions, while Arizona’s numbers just lending to lend, and I think that’s reflected in their include massive losses from the state’s second largest delinquency numbers,” he said. “And, the fact is, many credit union, $1.9 billion Arizona Federal Credit are taking advantage of this opportunity.” Union. Delinquencies are something to brag about, espeTake California’s two failed credit unions out of the cially considering that credit union and equation and the industry turns a profit, bank numbers aren’t comparing apples to Johnson said. apples. Johnson pointed out that credit Arizona does too, when AFCU’s $42.5 union delinquency reporting to regulators million losses aren’t factored in. Accordincludes all loans 60 days past due. Banks ing to figures provided by the Arizona don’t have to report loans delinquent Credit Union League, the state minus until 90 days past due. AFCU would have actually turned a So while credit union delinquencies profit, albeit a small one, $6.65 million. inch dangerously close to 1%, bank delinSome states are even reporting quencies are already over 2%, and thanks declines in loan allowances, including to reporting inconsistencies, the credit Nebraska, Delaware and Arkansas. quality gap is even wider than it appears, The common bond of credit unions he said. help the industry weather regional woes, JOHNSON The chickens come home to roost in Johnson said. the charge off numbers, especially in real “The market really depends on where estate lending. you are, and that’s an advantage to primarily local Credit union first mortgage charge offs: 0.069%. credit unions, because a lot of national lenders have FDIC-insured institution first mortgage charge offs: pulled back,” Johnson said. 0.98%. Johnson also pointed out that rust belt states are Credit union home equity charge offs stood at 0.52%, beating national ROA averages. while FDIC-insured home equity charge offs were “In Ohio and Michigan, areas that have been in the 1.79%. headlines, you’d guess there would be problems,” JohnFueled by provision increases, Arizona and Califorson said. “But, in fact, you’d find that Michigan had an nia credit unions reported statewide negative return on ROA of 0.60%, and Ohio 0.56%, so even there, credit average assets numbers for the second quarter. Howunions are performing well.” —handerson@cutimes.com ever, Johnson pointed out, eight states reported overall Corporates Get Behind First Carolina NetWALK GREENSBORO, N.C. — First Carolina Corporate employees recently completed an original wellness plan that combined fitness with education about the corporate system. The corporate’s wellness committee members created NetWALK, an employee fitness initiative, which logged and combined each employee’s steps into a group effort. After four months’ effort, 28 First Carolina employees collectively walked 9,241 miles as of Sept. 1, enough to reach every corporate. “Originally, it was just going to be to U.S. Central and back, but everybody wanted to do it, and we quickly realized it would only take about a week,” said Ruth Chu, operations analyst and wellness committee member who spearheaded the effort. “So, we decided to hit all the corporates. We got a U.S. map, calculated mileage, and got pedometers for everyone,” she said. The map was posted in the employee break room to record the group’s progress. A “where are they now” interactive flash map was also featured on the corporate’s Web site (www.firstcarolina.org), which included information about each corporate reached. Staff also received an e-mail alert when each corporate location was reached, which included educational information about the corporate and encouraging messages from peers. “We e-mailed the other corporates when we started, and asked if they would like to participate,” said Kecia Brooks, vice president of member communications. “All replied with well wishes, and 18 of them sent packages that included hats, t-shirts, lip balm, visors, water bottles, all with corporate logos. In fact, I just saw one of our employees wearing another corporate’s shirt today.” The corporate also competed in a related event called “lose David,” in which employees attempted to collectively lose the body weight of President/CEO David Brehmer. —handerson@cutimes.com Employees at First Carolina Corporate recently completed their NetWALK fitness programs, which spread ‘virtually’ nationwide to all the corporate credit unions. cutimes.com 8 Credit Union Times, October 1, 2008 http://www.firstcarolina.org http://www.cutimes.com
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