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MCUE CU loans and savings grow in May
MADISON, Wis. (7/5/12)--Credit union loans grew at the fastest pace in nearly three years, and loan growth should continue in the near future, a Credit Union National Association (CUNA) economist said in his analysis of CUNA's Monthly Credit Union Estimates (MCUE) for May.

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"Credit union loans grew by 0.54% in May--a 6.5% annualized rate--and the fastest monthly increase since August 2009, when the federal cash-for-clunkers program was in full swing," Mike Schenk, CUNA vice president of economics and statistics, told News Now.

"Loan growth outpaced the 0.21% growth in savings balances--2.5% annualized--in the month. As a consequence, the movement's aggregate loan-to-savings ratio increased from 67.1% in April to 67.3% at the end of May--the second straight month that reflected an increase," Schenk said.

"Seasonally strong borrowing should bring a continuation of this pattern in the coming months, which--all else equal--should have a positive influence on credit union bottom-line results as short-term, liquid investments yielding close to zero are replaced with higher-yielding assets," he added.

Credit union loans totaled $592.7 billion in May, compared with $576.3 billion in May 2011.

Used-auto loans and adjustable-rate mortgages led loan growth, each with a 0.8% increase, according to the MCUE. Fixed-rate mortgages and new-auto loans rose 0.7% each. Credit card loans were up 0.6%, unsecured personal loans grew 0.1%, and home equity loans fell 0.5%.

Asset quality--credit unions' 60-plus-day delinquency rate--deteriorated, but only marginally as dollar delinquencies inched up from 1.42% in April to 1.44% in May, Schenk said. The increase represents the first increase after four consecutive months of decline.

"Going forward, we expect continued, though slow, improvement in economic conditions, with a continuation of labor market improvement, marginal income gains and more loan growth. If that scenario plays out, credit unions should expect a re-emergence of the trend of improving asset quality," he explained. "More important, the improvements are likely to push the expected aggregate delinquency rate back down near the 1% long-run norm by 2013."

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Earnings,or return on assets (ROA), declined slightly from an annualized rate of 0.96% in April to 0.83% in May, Schenk said. Overall, credit unions collectively posted a 0.80% ROA in the first five months of 2012--0.86% in full year 2011 (0.68% with corporate stabilization expense).

The movement's overall capital-to-asset ratio increased, to 10.15% at the end of May from 10.11% in April, Schenk added. The total dollar amount of capital is $104 billion.

Credit union savings in April totaled $880.9 billion--or $51.7 billion more than the $829.2 billion in May 2011. Credit union savings balances grew 0.2% in May compared to a 0.6% decrease in April, the MCUE indicated. Money market accounts grew 0.8% and regular shares increased 0.7%. One-year certificates fell 0.1%, individual retirement accounts dropped 0.2%, and share drafts declined 1.2%.

"Total memberships passed the 95 million mark for the first time in May," Schenk said. "Membership growth continued at strong pace--though somewhat slower than that recorded in the wake of Bank Transfer Day. Overall memberships increased 0.26% in May, a 3.1% annualized rate, the second-fastest monthly change this year. Since the start of the year, memberships are up 1.2%--2.8% annualized--the third-fastest five-month increase in the past 10 years."


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