Lending at California's credit unions increased by 1.3% in the second quarter, making it the fastest second-quarter loan balance increase since the beginning of the recession in 2007, according to a new report from the California Credit Union League.

Automobile financing led the way with a 7.8% in new vehicle loans, and a 6.3% increase in used vehicle loans in the first half of 2013. Unsecured personal loans also grew increasing by 1.8% in the first half.

“It's clear the reports of California's (economy) heating up weren't a flash in the pan,” said League Chief Economist Dwight Johnston. “This improved economic outlook is building consumer confidence with near-record increases in new loan applications for big-ticket items ranging from homes to cars.”

Helping drive demand for new vehicles is that Californians have returned to work in 2013. The state's unemployment rate dipped to 8.5% at the end of the year.

While the state's jobless rate is still high, it declined nearly a percentage point in the second quarter and 1.3% since the start of the year, according to the CCUL.

Another sign that the state's economy is improving is that home prices have increased by 5% in the first quarter and by 17% in the year ending in March, the most recent data available for the Federal Housing Finance Agency purchase-only index.

What's more, statewide personal bankruptcy filings declined by 26% in the first half of the year compared to year-ago levels according to the Administrative Office of U.S. District Courts.  California credit union borrower-bankruptcy filings declined even faster—by nearly 31%—in the same time period.

Despite the increased spending, the report found Californians continued to save. Credit union savings balances grew 3% in the first half and by 3.2 percent in the year ending June 2013. With historically low market interest rates consumers continue to focus on building short-term liquid accounts. The state's credit unions report regular savings account balances grew by 6.9%, while checking account balances increased by 5.4% and money market accounts edged up by 1.4% in the first half of the year, according to CCUL.

The CCUL report is compiled from credit unions representing 53% of all federally insured credit unions that collectively serve 96% of the members and manage 98% of the assets.