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CU earnings ROA start year on positive note
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MADISON, Wis. (3/5/12)--Credit unions began 2012 on positive note, propelled by strong earnings and a good return on assets (ROA), according to a Credit Union National Association (CUNA) economist's  analysis of January's monthly sample of credit unions.

"Credit unions started the new year with a bang," Steve Rick, CUNA senior economist, told News Now. "Return on assets--net income divided by average assets--rose to 1.10% in January, on an annualized basis, up from 0.88% in January of 2011. Strong earnings, along with slightly falling assets, pushed the movement's capital-to-asset ratio up to 10.33% in January from 10.22% in December 2011." The total dollar amount of capital is $101 billion, according to the monthly estimates.

Credit union loans outstanding decreased 0.2% during January 2012, compared with a 0.4% increase in December 2011. Adjustable-rate mortgages led loan growth with a 1.2% increase, followed by home equity loans and unsecured personal loans, which each rose 0.1%. Used-auto loans decreased 0.2%, while fixed-rate mortgages and credit card loans declined 0.3% and 1.8%, respectively. Credit union loans totaled $585.7 billion, compared with $576.8 billion in January  2011.

"Credit union members appear to be loosening their purse strings and spending as evidenced by faster seasonally adjusted loan growth in January 2012 versus January 2011 and slower savings growth," Rick said.

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Credit union savings balances fell 0.5% in January compared to a 1.2% increase in December. Money market accounts led savings growth with a 1.1% gain, followed by regular shares, which rose 0.2%. One-year certificates decreased 0.4%, while individual retirement accounts and share drafts each declined 0.5% and 4.1%, respectively. Credit union savings in January totaled $843.1 billion--or $40 billion more than the $803.1 billion in January 2011.

Regarding asset quality, credit unions' 60-plus-day delinquency rate remained at 1.6%. "Credit union loan delinquency rates--delinquent loans divided by total loans--rose to 1.63% in January from 1.62% in December, but below the 1.77% reported in January 2011," Rick said. "The January rise in delinquency is a function of seasonal effects and falling loan balances.  We expect the delinquency rate to resume its decline next month."

Credit unions' loan-to-savings ratio remained at 69%. Their liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained at 18%.


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