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CU System
July MCUE CU earnings and loan balances rise
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MADISON, Wis. (9/5/12)--Credit unions nationwide collectively saw their earnings and loan balances rise in July, and those trends should continue this year, according to a Credit Union National Association (CUNA) economist's analysis of CUNA's monthly sample of credit unions for July.

"The credit union movement's capital-to-asset ratio jumped to 10.3% in July from 10.1% in June due to capital growing much faster than assets," Steve Rick, CUNA senior economist, told News Now. "Capital levels rose over 1% in July from stronger earnings, while assets fell 0.7%. In July, credit union annualized return on assets came in strong at 1.28%, up from 0.82% for the first seven months of the year.  Earnings keep rising as provision for loan losses keep falling," he said.

"Higher earnings will allow credit unions to grow their assets faster while maintaining a given capital-to-asset ratio," Rick added.

The total dollar amount of capital for credit unions is $105 billion.

Credit union loans outstanding grew 0.4% in July 2012, the same as June. Credit union loans totaled $597.8 billion in July, compared with $579 billion in July 2011. Unsecured personal loans led loan growth with a 1.2% increase, followed by new-auto loans (1%), andadjustable-rate mortgages and used-auto loans, which each rose 0.9%. Credit card loans grew 0.7%, while home-equity loans and fixed-rate mortgages declined 0.3% and 0.5%, respectively.

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"Credit quality has improved significantly over the last year," Rick said. "The credit union delinquent loans-to-total-loans ratio came in at 1.29% in July, down from 1.59% in July 2011. This ratio is expected to fall further as the economy recovers and loan growth picks up. We expect credit union loan balances to grow 3% in 2012 and 5% in 2013.

"Faster loan growth will help counter the recent reduction in credit unions' net interest margins," Rick added.       

Credit union savings balances fell 0.9% in July, compared with a 0.8% increase in June. Credit union savings in July totaled $880.7 billion--or $50 billion more than the $830.7 billion in July 2011. Money market accounts led savings growth with a 1% gain. On the decline were one-year certificates (-0.2%), individual retirement accounts (-0.4%), and regular shares (-0.7%). Share drafts fell 6.4%.  

Regarding liquidity, credit unions' loan-to-savings ratio increased slightly in July to 68% from 67% in June.


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