DALLAS - During Southwest Corporate's Economic Forum here, Credit Union Journal asked attendees: How has the credit crisis directly affected your CU? What about your lending volume? Answers varied widely depending on the responder's local market.
It has been a domino effect in that people are holding on to their money and paying off debt. Our loan volume is down a little bit in all categories. Deposits are stable, although we had some exiting of deposits when people pulled what they had in excess of $100,000. Delinquencies are fine.
We don't have credit cards any more, and I think those will be the next shoe to drop. Next year there will be lots of delinquencies in credit cards. Car loans have been our bread and butter and, with people not buying, car dealers are suffering and the financial institutions that fund car loans are suffering.
We have seen 16% deposit growth this year, but not so much as a direct result of the credit crisis as people pulling dollars from stocks and bonds. They are willing to compromise rate for security.
We are a community charter, open to the entire county, and we recently implemented a payday lending program called Payday Plus. It was planned to be our 2009 initiative, but with all the things going on in the economy, and our members paying $4 a gallon for gas this summer, we implemented it on Aug. 1. Without doing any advertising on it, we already have booked 82 loans. We give people a much better rate than at a payday lender.
Our lending volume is up 8% this year versus last year. Much of our growth is in new and used car loans.
We are seeing significant slowdown in loan demand. In the central part of Texas, people are stepping back and looking at the insurability of their deposits. We are making sure members know their deposits are insured and we are helping them with any advice they need.
Our local economy is relatively stable. We are near Fort Hood, which is the largest military base in the free world, so there is not as big a downturn as in other areas.
Our loan volume is down in all categories. Even mortgages have slowed to a snail's pace. It is a buyer's market for both autos and homes. With the election, we'll see more people moving forward. We expect to see a recovery in the next 12 months or so.
Our loan volume has grown 7% this year, our membership has grown 6% and our deposit growth is 6%. Life is good!
Because we are an education-based credit union, we have a very stable membership.
The local economy has a lot of oil and gas, and with prices up the way they are, it is really feeding the area. Overall, all the financial institutions in our area are doing quite well.
Our reality is oil prices have affected us the most. Most people in El Paso have SUVs and trucks, and we have seen many delinquencies. On the plus side, home values are holding up, and the local economy has done well because we have a lot of military.
The biggest impact of the credit crisis is our community is low-income, so a "normal" mortgage in El Paso is what some call "subprime." The average income is just $32,500.
When you have an overall economy that fears low-income borrowers, it impacts the mortgage market in our area and makes it difficult to sell mortgages on the secondary market.
To comply with Fannie Mae's standards, the rate these loans would have to be more than 8%.
This is really unfortunate, because our members pay their bills.
Our loan volume is okay; not as strong as it was. We have gone from $10 million to $12 million six months ago to $4 million to $5 million. We are 95% loaned out, which is good.
It has devastated us as far as charge-offs and delinquencies. We had to get lax in our credit standards to keep from losing loans to the competition, and now people are overextended.
Making things worse is the local economy is dying.
More jobs are moving out than moving in. There was one big employer-a paper mill-and it has been on the brink of going out of business for months now.
Our lending volume has dropped $10 million in the last 18 months. People are defaulting on their credit cards and giving back their cars. The good news is they are holding onto their real estate loans as a last resort-they figure they have to have a roof over their heads. Mortgages have been our best loans. We have had hardly any problems with mortgages.
