Credit unions experience surge in lending

In an article for the The Credit Union Times, columnist Michael Muckian explored the reactions of credit union lenders to the recent trend regarding improved loan performance. As the economy makes its recovery, lenders seem enthusiastic about future potential.

"Credit unions are no longer on the verge of a lending surge, they're in the verge and in a big way," Steve Rick, senior economist for the Credit Union National Association (CUNA) told the source. "We're projecting a 9.6 percent loan growth rate for 2014, the largest we've seen since 2005, when loans grew 11 percent."

According to data that's part of CUNA's Financial and Statistical Trends program, new auto loans are driving the trend. These loans have grown at an impressive 1.7 percent per month, reaching 20 percent annualized growth in the past year. 

The Credit Union Times points to a strengthened economy, increased job growth, pent-up demand and improving consumer confidence as the cause for the increase in consumer lending. Credit unions' lower loan rates are causing these smaller lenders to begin outpacing loan growth at larger national banks, and consistent monthly growth indicates there is reason to argue that this trend may prove sustainable. 

However, the article stresses that the size and location of individual credit unions can determine how much of this trend they are able to take advantage of. For example, in areas like Colorado and Texas the growth of the oil industry supports the economic condition of local citizens, and therefore promotes local credit unions' lending capability. 

For credit unions to maximize returns during this significant period, risk management software should be implemented to reduce risk and increase profitability. Reacting quickly to the rapidly changing economic environment is beneficial for small lenders, but must be accompanied by proper credit risk assessments to protect both parties. 

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