ALEXANDRIA, Va. - Performance is par for the course again after last year's lending boom.

During the first six months of 1995, credit unions saw loan growth and net income cool to the average levels of the past 10 years, according to preliminary call report data.

Virtually the only aberration is sluggish deposit growth, which could possibly lead to the slowest expansion in six years, said William F. Hampel, chief economist for the Credit Union National Association.

"It's a return to normalcy," Mr. Hampel said. "Credit union net income was unusually high in 1992 and 1993, and now it's coming back down to normal."

"Asset growth is slower than usual, however," he said. Credit union assets consist mainly of loans and investments in government securities. The slowdown reflects sluggish deposit growth.

Federally insured credit unions earned $1.4 billion in the first six months of 1995, down 5.8% from the year-earlier period, according to the National Credit Union Administration.

Net income fell because credit unions paid more on deposits, said Tun Wai, chief economist for the National Association of Federal Credit Unions.

That's still better than the 10.5% dive in the first half of 1994. Credit unions averted that by jacking up loan rates.

"The decline has slowed because of loan growth," he said. "Rates have gone up."

The industry's annualized return on assets for the first half of 1995 came in at 1.1%, compared with 1.2% a year before and 1.4% in 1993.

Mr. Hampel expects that by the end of 1995 the return will settle at 1% - the industry's traditional level.

But some credit unions are performing way above average. Redstone Federal Credit Union, Huntsville, Ala., racked up a 1.9 ROA by being "lean and mean," said chief executive Gerald Toland.

"That's a hot-button phrase, but it's true," said the chief of the $800 million-asset institution. "We're going more and more to technology, so we've been able to grow without adding staff." The $800 million-asset credit union has 463 employees, the same as in 1990, when it had $563 million in assets.

Total assets for the industry's 11,836 institutions grew 3.7%, to $300.2 billion, in the first six months of 1995, compared with 4.6% growth in the year-earlier period.

Mr. Hampel said it's possible the industry could match the anemic 4% growth of 1994 - compared with 8.8% in 1993 and 14.1% in 1992.

"We've pretty much seen whatever growth there will be," he said, noting that most deposit growth - which spurs credit union asset growth - occurs in the first half of the year.

Deposits grew a sluggish 4.1% during the first six months of 1995, to $265.5 billion, compared with an already weak 4.5% in the year-earlier period.

"People aren't saving a whole lot," Mr. Hampel said. "They're on a spending spree."

Mutual funds are another culprit, he said. Members no longer are yanking money out of credit unions, but those with mutual funds are putting more of their money in the instruments.

Loan growth is on track to its normal range of 10% to 15%, Mr. Hampel said. Last year portfolios swelled 17%, after negligible growth in 1993 and 1992.

For the first six months of 1995, loans grew 4.4%, to $183.6 billion, compared with 6.1% a year earlier.

At First South Credit Union, loan growth is comparable with last year's, said chief executive Craig Esrael. The Millington, Tenn., institution's portfolio grew 8%, to $74 million.

"Consumer demand has been high," Mr. Esrael said. New mortgage products also have pitched in. For instance, this year First South offered a "5-25" product, which is at a fixed rate for five years and a variable rate for 25 years.

Meanwhile credit unions beefed up their capital to a record 9.9%.

Mr. Hampel said that after credit unions hit 10% capital, they might start to maintain capital rather than build it.

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