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CU savings surprisingly down loans up
MADISON, Wis. (10/1/09)--Credit union savings balances unexpectedly declined in August, while loans grew slightly, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions.
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Credit union savings balances declined 0.5% in August, but grew 8.3% to $755.1 billion during the first eight months of 2009. In August, money market accounts led savings growth with a 1.4% increase, followed by individual retirement accounts (1.2%). One-year share certificates declined 0.7%, while regular shares and share drafts declined 1.6% and 2.1%, respectively. “Credit union savings balances fell a surprisingly large 0.5% in August, reversing the surge in savings balances seen this year,” Steve Rick, CUNA senior economist, told News Now. “We typically see a seasonal savings decline of 0.46% in August as members withdraw funds for vacations and back-to-school shopping. But we had been seeing a strong underlying trend of monthly growth in savings of around 0.8%. “Year-to-date credit union savings balances are up 8.3%, compared to a 5.8% gain for the similar period last year,” he added. “Given the savings pace so far, credit unions could end up posting a 10% increase in savings balances this year, the fastest pace since the 11.3% posted in 2002.”
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Credit union loans outstanding increased 0.7% to $590.5 billion during August and 1.7% during the first eight months of 2009, down from a 5.1% increase during the same period in 2008. During the month, credit card loans led loan growth, rising 1.6%, followed by unsecured personal loans (1.4%) and home equity loans (1.3%). New-auto loans, used-auto loans, and other loans each increased 0.7%, while fixed-rate and adjustable-rate mortgages increased 0.6%. Other mortgages decreased 0.8%. “Loan balances grew a modest 0.7% in August, slower than the 1% pace set last August,” Rick said. “Credit union members are still hesitant to take on new credit due to worries of possible job losses. The government's ‘Cash for Clunkers’ program did reverse a nine-month slide in new-auto lending. “Credit unions posted a 0.73% increase in new-auto loan balances in August, up from no growth last August,” he added. “The program probably pulled forward new-auto demand, so we expect a sharp drop in new-auto lending for the next few months.” The movement’s overall capital-to-asset ratio increased to 9.9% in August. The total dollar amount of capital is $89 billion. Credit union 60-plus-day delinquencies remained constant from July 2009 to August 2009 at 1.7%. “The credit union movement's capital-to-asset ratio climbed back over 9.9% in August, up from its recent low of 9.4% in May, but below the 11% set last August,” Rick said. “Delinquent loans now stand at 1.72% of total loans outstanding as rising unemployment and falling home prices increase both default and collateral risk.” The loan-to-savings ratio increased slightly to 78.2% in August 2009. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased slightly to 19%.
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