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News Now

CU System
August CU loans up 1 savings up 3.2
MADISON, Wis. (10/3/08)--Credit union lending remained strong in August and the overall credit union loan delinquency rate remained historically low, indicating the credit crisis is having a marginal effect on credit unions’ credit quality.
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Credit union loans outstanding increased 1% in August, and 5.4% over the first eight months of 2008, according to the Credit Union National Association (CUNA) monthly sample of credit unions. Other loans (2.6%) led growth, followed by adjustable rate mortgages (1.6%), home equity loans (1.4%), credit cards (1.2%), fixed-rate mortgages, and used-auto loans (1%). Fixed-rate mortgages had the largest rise since December, increasing 13.9%, while new-auto loans decreased 5.8% during the same period. “Credit union lending remained robust in the month of August as total loan balances outstanding rose 1.1% or 8.4% on a seasonally adjusted annual rate,” Steve Rick, CUNA senior economist, told News Now. “With other financial institutions tightening their loan underwriting standards, credit unions are picking up market share, especially in the real estate lending area. “Fixed-rate first mortgage balances increased 1.1% in August, slightly lower than adjustable-rate first mortgage balance increase of 1.6%,” he continued. “More and more credit unions are holding onto their mortgages rather than selling them into the secondary market. In the first half of 2008, only 24.5% of originated mortgages were sold into the secondary market, down from 27.6% in the first half of 2007,” he said.
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Credit union savings balances remained at $691 billion in August, but have risen 5.9% year-to-date. Share drafts led savings growth, rising 3.2% in August. Money market accounts (0.3%) and individual retirement accounts (0.2%) increased, while one-year certificates declined 1%. With loan growth outpacing savings growth, the loan-to-savings ratio increased to 83% from 82.1% in July. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 15.5% in August. Regarding asset quality, credit unions’ 60-plus-day delinquencies remained at 1% in August and for all of 2008 so far. “The credit crisis is having only a marginal effect on credit unions' credit quality,” Rick said. “The overall credit union loan delinquency rate barely climbed to over 1% in August, even though it is up from 0.73% during August 2007. The current delinquency rate is low by any historical measure and is quite manageable for credit unions.” The movement’s overall capital-to-asset ratio remains at 11%, with the total dollar amount of capital at $90 billion.
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