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CU loan balances fall but earnings may rise in 11
MADISON, Wis. (1/5/11)--Although credit unions’ loan balances declined in November and the past year, their earnings are expected to increase in 2011, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly estimates of credit unions.
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Credit union loans outstanding decreased 0.2% during November, the same as the decrease for October. Unsecured personal loans led loan growth, up 1.6%, followed by fixed-rate mortgages, credit card loans and used-auto loans, which rose 1.5%, 0.9% and 0.3% respectively. Home equity lines of credit declined 0.4%, followed by new-auto loans (1.3%) and adjustable-rate mortgages (3.4%). Credit union loans in November totaled $580.1 billion, compared with $590 billion in November 2009. “Loan balances declined 1.7% over the last year,” Steve Rick, CUNA senior economist, told News Now. “The main cause of the decline was a 17% drop in new-auto loan balances over the last 12 months. The two bright spots in credit union lending were used-auto and credit card loans, which were up 3.6% and 3.1% respectively over the last year.”
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Credit union savings balances decreased 0.5% in November, compared with a 0.7% increase during October. Money market accounts led savings growth, rising 0.3%. Individual retirement accounts fell 0.1%, followed by one-year certificates (0.3%), regular shares (0.6%) and share drafts (1.5%). Credit union savings in November totaled $799.4 billion--or $34 billion more than the $765.4 billion in November 2009. Credit unions’ 60-day-plus delinquencies increased slightly to 1.8% during November. “The credit union loan delinquency rate has remained essentially unchanged over the last year,” Rick said. “The November delinquency rate came in at 1.77%, one basis point lower than the 1.78% reported in November 2009. The delinquency rate will rise to the mid-1.8% level during the December-to-February time period because of seasonal factors.” The loan-to-savings ratio increased slightly to 73% in November 2010. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities-- remained constant at 19%. The movement’s overall capital-to-asset ratio remained at 10% in November. The total dollar amount of capital is $94 billion. “Over the past 12 months, the growth rate of credit union capital exceeded the growth rate of assets pushing the capital-to-asset ratio up from 9.9% in November 2009 to 10.1% in November 2010,” Rick said. “Credit union earnings are expected to increase in 2011 due to higher net interest margins and falling loan loss provisions.”


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