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Southeastern credit unions see more growth in third quarter

In the first real look at hard numbers following the LSCU Statewide Image Campaign in September and the backlash against banks for suggesting a $5 fee for debit card use, credit unions in Alabama and Florida experienced a higher than normal membership growth in the third quarter. Southeastern credit unions added 48,000 members in the third quarter, 31,000 in Florida and 17,000 in Alabama. For perspective, Florida credit unions averaged 12,000 new members in the first two quarters while Alabama credit unions averaged eight thousand. This equates to 76,000 new members year over year for Southeastern credit unions from 2010 to 2011 with another quarter yet to report.

“The LSCU Statewide Image Campaign hit at the exact right time,” said LSCU President/CEO Patrick La Pine. “The campaign debuted Sept. 7, which was two weeks before the bank fees were announced and before the Bank Transfer Day buzz. It set the stage for consumers to begin looking at a credit union. We can clearly see the jump in numbers. Consumers are moving to a financial institution that has their best interest in mind.”

As credit unions saw new members opening accounts, they also saw a jump in assets. Southeastern credit unions have added $1.4 billion in total assets year over year in 2011 with another quarter yet to report. The largest jump came for Alabama credit unions that saw $1.3 billion added, while Florida saw $159 million in growth. For Alabama, it continues a growth spurt that has seen assets grow $4.4 billion since 2007. For Florida credit unions, the .4-percent growth indicates that the economy is slowly showing signs of improvement. Asset growth was negative in 2010.

“For our Florida credit unions we are seeing slight improvements in pockets of the state, which is good news,” said La Pine. “Credit unions in Alabama have shown great growth and collectively their assets are growing at twice the national credit union average.”

Member business lending (MBL) is a hot topic right now in Washington, D.C. as credit unions are looking to have the arbitrary 12.25 percent of assets MBL cap raised. Southeastern credit unions are working with small businesses to provide MBL loans, but the cap is preventing some credit unions from lending more. Florida credit unions saw a 2.2-percent growth in MBLs, which is almost double the growth rate for 2010. Alabama credit unions saw a 1.5-percent growth in MBLs. Currently there is legislation to lift the MBL cap for credit unions from 12.25 percent to 27.5 percent.

“We are seeing the need for member business loans and we’re seeing where our credit unions want to make them,” said La Pine. “However, this arbitrary cap is keeping many credit unions from actively pursuing them. The need is great right now and there is literally no reason why Congress would not pass H.R. 1418 or S. 509. By raising the cap, Congress would infuse $785 million into the Alabama and Florida marketplace. The best part is that it would not cost the taxpayers one penny.”

The quality of loans being made by credit unions is among the best in the country. For the third straight quarter, Alabama and Florida credit unions are seeing delinquent loans to loans and net charge offs to loans improving. Alabama credit unions are seeing a 14 basis points reduction in delinquent loans to loans in 2011, as compared to 2010. This is well below the national credit union average, which is good. Florida is seeing about a 30 basis points improvement. This is still above the national credit union average, but a major drop from 2009 and 2010. Net charge offs in Alabama have dropped 12 basis points in 2011, as compared to 2010. It’s also shaping up as the best year for net charge offs since 2007. In Florida, net charge offs show a 33 basis points improvement in 2011 as compared to 2010. This is the best net charge off improvement since 2008.

Credit union members continue to save at rapid rates. In Alabama, members’ savings is showing an eight-percent growth rate, which is twice the national credit union average and three percent higher than in 2010. In Florida, members’ savings grew two percent, which is below the national average, but reverses the 2010 numbers that showed negative growth in credit union member savings. These are all signs that the economy is slowly improving in the Southeast.