Credit unions cash in on 2013 refi boom

Credit unions operating in Northern Colorado and the Boulder Valley rode the refinancing boom to improved asset numbers, with nine showing improvement in 2013.

A new report from the Mountain West Credit Union Association shows that among its member credit unions, total assets increased from $9.4 billion to $9.8 billion year-over-year, an increase of 4.4 percent.

This increase can be largely attributed to market factors, said Scott Earl, chief executive of Mountain West Credit Union Association, a tri-state organization representing 132 credit unions in Arizona, Colorado and Wyoming.

Mortgages are one of the most common loans made by credit unions, Earl said, and the spike in refinancing as a result of low interest rates nationwide generated increased traffic for home loans in 2012 and the first part of 2013.

Activity has started to taper off from the record-high levels it reached, but is still higher than normal, said Dennis Paul, assistant vice president of business and community development at Elevations Credit Union, which saw assets rise from $1.23 billion to $1.36 billion year-over-year in 2013, a 6.2 percent bump.

Mortgage lending is off 40 percent in 2014 compared with 2013, Paul said, “but we’re confident we’ll be able to lend at a pretty good clip, even though we’re not at that record high anymore.”

Financial institutions statewide have seen decreases in mortgage lending in the second half of 2013 and the first months of 2014 as interest rates, while still low, are higher than the historically low 3.5 percent point where they hovered for nearly all of 2012.

Credit unions also have seen growth in the automotive lending sector, boosted by increases in vehicle purchases as those who put off buying a new vehicle during the recession head to dealerships.

Commercial lending also is picking up speed at credit unions, Earl said, but a cap placed on credit unions has limited how much of this type of lending they are legally allowed to do.

U.S. Sen. Mark Udall, D-Colo., repeatedly has introduced legislation to raise that cap, from 12.25 percent of a credit union’s total assets to 27.5 percent. The original cap was put in place in 1998, and many credit unions are approaching it, according to the Credit Union National Association.

Udall began proposing similar legislation in 2005 and has made several attempts since then. In 2013, the legislation “came very close” to passing, Earl said, and has been introduced to the Senate again in 2014.

CUNA estimates that if the bill passes, an additional $13 billion could be lent to small business nationwide, but bankers see the legislation as an unfair advantage for credit unions, which are tax-free entities. Commercial banks must pay taxes.

The competition between banks and credit unions heated up in the wake of the recession, which can be blamed in large part on Wall Street banks making bad loans that ultimately defaulted, leading to the collapse or acquisition of several of the country’s largest financial institutions.

Molly Armbrister can be reached at 970-232-3129 or marmbrister@bizwestmedia.com. Follow her on Twitter at @marmbristerBW.

on Facebook on LinkedIn