It was supposed to be a genteel affair, a talk among colleagues about issues facing the thrift industry.
That was until the group of top thrift executives at the Savings and Community Bankers of America's 1994 Winter Management Conference in New York a few weeks ago began talking about home lending at credit unions.
"Those damn credit unions," growled one executive in a Massachusetts accent, his back straightening. "They don't know when to stop."
He is not alone in such thinking. In the last year, credit unions have gone from thorns in the sides to tough competitors for many thrifts. And the thrifts are not pleased.
"It's unfair competition," said Joseph B. Blalock, an economist at SCBA. "More and more of them are trying to be a business rather than a credit union."
The thrifts have long complained that credit unions have an unfair advantage because they do not pay federal taxes, have a lenient regulator, and can expand their membership with little restraint.
What is new is that credit unions are making more home loans in more markets from more branches. And thrifts know it.
"I definitely think there is increased competition between the credit unions and the thrifts," said Peter C. Pannes, director of sales, support and product development, CMG Mortgage Insurance Co., a Madison, Wis., venture that provides mortgage insurance for credit unions.
According to the National Credit Union Administration, the industry's regulatory agency, home lending at credit unions is climbing -- even as other lenders have faced rocking declines in originations because of higher interest rates.
Total loan originations at credit unions jumped nearly 12%, to $161.4 billion, during the year ended June 30, 1994, according to the NCUA. First mortgage originations alone grew 15% to $35.4 billion during this period, the regulatory agency said.
"Mortgage lending in general has become more appealing to credit unions," Mr. Pannes said.
He said the National Credit Union Association, the industry's main trade group, has been pushing its members hard to make more home loans. "That combined with the fact that credit unions in certain markets have turned up the heat" has increased thrift-credit union competition," he said.
"I don't know how they can keep up the pretense that this is some sleepy business," said the SCBA's Mr. Blalock of credit unions. "This is not something they do on Tuesday nights."
Take, for example, San Antonio Federal Credit Union in Texas. The financial institution has dramatically multiplied its membership this year. And it has signed a lending arrangement with Lincoln Service Mortgage Corp., Owensboro, Ky.
"We are in the market, we are aggressively in the market, and we are expanding into the market," said Edward C. Speed, senior vice president.
Mr. Speed said his credit union expects to continue to gain market share in the areas it serves.
Credit unions have not affected loan originations at Citizens Savings Bank -- yet. But C. William Landefeld, the Normal, Ill., bank's president and chief executive, expects that to change dramatically next year.
He has heard that Construction Equipment Federal Credit Union, one of the state's largest credit unions, will open a branch in Citizens' business region. If it does, Citizens' home loan originations will fall off, perhaps significantly, he said.
Credit union officials defend their rights to compete with thrifts. They say that thrifts are trying to short circuit the remarkable growth in home lending the credit unions have achieved over the last year. And in any event, the credit union industry is a fraction of the size of thrifts.
According to the SCBA, thrifts have four times the assets of credit unions.
Mr. Pannes at CMG said he expects that credit unions will only provide more competition for thrifts. He said next year credit unions will get more involved in affordable housing and originate more high loan-to-value loans.
Old Rivalry Heats Up
Thrifts are increasingly focusing on credit unions as their competitors because:
* Credit unions are expanding rapidly into new markets.
* Credit unions and thrifts have matching target customers -- "working people," as one thrift trade association official described them.
* Home lending has increased at credit unions in the last year.
