MADISON, Wis. – The first quarter of 2003 picked up where 2002 left off – a period of market and economic uncertainty – but credit unions still managed to weather a gripping recession. The good news came in the third quarter year-to-date numbers which show lending is making a comeback, buoyed by real estate lending. Real estate loans, the largest lending category for credit unions, dominated portfolios most of the year. The first half of 2003 saw an increase of 7.13% to $107.91 billion and by the third quarter, mortgage loans shot up to $162.6 billion, accounting for 44.3% of outstanding loans. Credit unions began creating a buffer for interest rate rises expected in 2004 as evident with the increase in first mortgage loan originations from 29% in 2000 to an annualized 43.2% by the end of September. Business and used auto loans also saw growth while new auto loans dropped slightly by the third quarter. Several industry economists expect unsecured lending to pick-up during the holiday season and real estate loan demand to taper off as interest rates move higher. Business loans grew the first six months of the year, up from $6.66 to $7.56 billion while used auto loans expanded $77.22 billion and new auto loans dropped 0.33% to $60.26 billion. By mid-year, share account categories across the board continued to expand, with a significant 10.46% increase, up from $57.97 to $64.04 billion, while regular shares grew 9.78%, up from $172.16 to $188.99 billion. Conversely, by the third quarter, share savings and share drafts continued their ascension with both posting double digit increases at 11.33 and 10.01% respectively. Membership increased slightly this year to 83 million, up two million from 2002. Mergers and conversions contributed to a decrease in total credit unions, down from 10,999 in 2002 to 9,664 in 2003. Total credit union assets were up roughly 11% to $619 billion from $554 billion in 2002. The average return on average assets (ROA) for all federal credit unions in 2002 was roughly 1.04%, according to industry economists with the Credit Union Economics Group (CUEG). Most credit union management teams seem to believe that the prospects for earnings this year remain about the same or slightly lower. What appears to be most on the minds of credit union CEOs were concerns about the low interest rate environment and the resulting margin pressure institutions have felt throughout the first half of this year. Although general economic indicators have shown moderate signs of improvement, loan quality issues related to economic conditions remains a major concern over the near term. [email protected]