ARLINGTON, Va. — "I'd say we're definitely out of the woods."
That's the response from David Carrier, chief economist and director of research at NAFCU, following
"I would say that we're back to pre-recession conditions on most variables, on the ones that really count," said Carrier, pointing specifically to delinquencies and charge-offs, which respectively remained steady at 1.0% (a decline from 1.2% last year) and dropped from 73 basis points to 57 points year-over-year.
One of the biggest surprises for Carrier was the massive increases in student lending. That market saw 10% growth during Q3 and has risen by 32% since this time last year. But rather than say this might be the sign of any kind of bubble in that market, Carrier said he didn't believe there was any kind of ceiling in student lending beyond which CUs would be unable to grow.
"Credit unions make up such a small part of the market that there's a lot of room to grow," he said.
CUNA Chief Economist Bill Hampel noted that it's hard to find any bad news in the NCUA data — a welcome change from recent years.
"If I'm looking for positives in these numbers, it would be the return of consumer loan growth," said Hampel, adding that non-mortgage loans have seen a marked increase in the past year. "The fact that new and used vehicles and student loans grew the way they did is really, really good news for credit unions."
The economist also noted that credit unions continue to see strong gains in mortgage originations, despite recent signs that long-term interest rates are on the rise.
"We were expecting mortgage rates to slow down, which would mean that this source of revenue would slow down," said Hampel. "It hasn't slowed down; credit unions have made similar amounts of first mortgages in the first, second and third quarters of the year. New mortgage lending... held up in Q3 better than what I expected, so gains from selling those mortgages held up also."
Hampel told Credit Union Journal that while the report is "not gangbusters, but just about everything is moving in the right direction." The only thin credit unions could complain about, he added, is that things aren't getting better more quickly.
"We might like them to improve faster, but let's not let the perfect be the enemy of the good."
