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News Now: September 2, 2014

NEW: Loan balances up 9.8% according to NCUA 2Q data

ALEXANDRIA, Va. (9/2/14 11:20 a.m. ET)--Second quarter data from the National Credit Union Administration indicates the highest year-over-year loan growth since 2006, the agency announced today. Data also showed federally insured credit unions saw membership grow by 909,452 over the last quarter.

Lending increased in all categories, with outstanding loan balances up 9.8%, to $673.9 billion from the same time last year.

The data released from the NCUA shows federally insured credit unions saw:
  • New auto loans grow 17% to $77.7 billion;
  • Used auto loans increase 11.6% to $135.3 billion;
  • Net member business loan balances rise 12% to $48.8 billion; and
  • Non-federally guaranteed student loans increase 26% to $2.9 billion.
First mortgage real estate loans reached $279.2 billion, up 9.9% from the second quarter of 2013. Of those loans 61% had fixed rates.

The growth in total loans over the year contributed to a 4.2 percentage-point increase in the overall loan-to-share ratio, which reached 71.7%, the highest ratio since the fourth quarter of 2010.

Total membership in federally insured credit unions now stands at 98 million, according to the NCUA.

The Credit Union National Association announced that total credit union membership passed the 100 million mark in June. According to CUNA's monthly survey, that number grew by 0.4% in July, bringing total credit union membership to 100.5 million.

See tomorrow's News Now for more on the NCUA's second quarter data.

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Engaged members fuel CU loan growth: MCUE survey

CU System
MADISON, Wis. (9/2/14)--Credit union lending numbers continue to come in strong, with July's monthly and year-over-year increases notching levels not seen in years, according to the monthly survey of credit unions from the Credit Union National Association.
Click to view larger image(Source: CUNA Economics and Statistics)
"The monthly credit union estimates report first and foremost makes it clear that members remain engaged--reflected in a continuation of strong results in the lending arena," said Mike Schenk, CUNA interim chief economist.
"Overall, the 1.4% monthly increase in loans (16.7% annualized) is the fastest monthly advance since August 2005, and the 10.2% year-over-year increase is the highest seen in nearly a decade," he told News Now.
Year-to-date loan growth has increased 6.2% compared with 3.4% for the same period last year.
"Importantly the increases are broad-based with four of the key portfolios we track reflecting double-digit increases: new autos are up 19.7% over the past 12 months, followed by adjustable-rate mortgages (14.1%), used autos (13.4%) and personal unsecured loans (11.7%)," Schenk noted.
"Beyond this, we see solid increases in credit cards, which increased 7% in the past year and a decent 12-month jump in fixed-rate first mortgages (6.7%). Even home equity loans reflect a healthy increase--with a 5% increase compared with July 2013 levels," he said.
Only second-mortgage portfolios showed some weakness, with a 2% decline over the past year.
Schenk said, "Look for strong loan growth to continue, fueled by improving labor markets, higher incomes and an abundance of pent-up demand.
"Of course, those conditions will help to buoy credit union bottom-line results and are certain to push both delinquency and net charge-off rates lower in the coming months."
Click to view larger image(Source: CUNA Economics and Statistics)
Savings balances declined less in July (0.1%) compared with June's drop of 0.6%. One-year certificates experienced gains of 0.8%, while declines were seen in individual retirement accounts, share drafts, regular shares and money market accounts.
In June, the milestone of 100 million credit union memberships was reached. July's numbers show continued growth--0.4%--bringing the number to 100.5 million.
Credit unions' overall capital-to-asset ratio remained at 10.7%. The loan-to-savings ratio ticked up to 73% in July from 71.9% in June, and the liquidity ratio fell to 16.2% from 16.4% in June.

Even 1 step makes a difference in preparing for disasters

CU System
MADISON, Wis. (9/2/14)--This year's theme for National Preparedness Month is "Take Action to Prepare," and taking just one step can make a difference in getting your credit union ready.
Click to view larger imageThese eight steps are only part of an infographic that can help credit unions kick start their disaster preparedness plans. (Agility Recovery Graphic)
"Take a single step forward," said Scott Teel, marketing director at Agility Recovery Services, a CUNA Strategic Services alliance provider. "When it comes to disasters, any step a credit union takes will benefit its employees, members, community and business." And many of those steps don't take a lot of time, effort or money.
One action is creating a crisis communication plan. No matter how large or small the crisis, you must be able to communicate your status to your employees and your members, Teel told News Now.
"If it's a power outage that's affecting one branch, or only certain transactions can be completed on mobile banking, if you have the ability to remotely update a website with an alert, it will make it so much easier for members," he said.
Don't make assumptions that the cell-phone or Internet service provider will be dependable during an emergency. Think about texting people instead of calling them when cell service is down.
"Depending on one certain device is a gap in a preparedness plan," Teel said.
In order to contact them, though, you must have collected that contact information. Teel suggests updating the company's contact list. "Include personal contacts--a parent, a spouse, a friend. Have a means to communicate with them," he said.
Credit unions can provide something as simple as a contact card for their members. "As kids go back to school, have the parents fill out one of your cards and give it to the kids to keep in their backpacks or lockers," Teel advised. "It shows that you care for your members beyond transactions, and it keeps preparedness at the top of their mind, too."
National Preparedness Month is a one-month focused campaign of the Federal Emergency Management Agency's (FEMA) awareness program.
As part of its goal to "spread the gospel of preparedness," Agility provides resources year-round for individual and businesses of all types.
Agility, in conjunction with the U.S. Small Business Administration and FEMA, will hold four free, half-hour webinars, starting Wednesday, for National Preparedness Month:
  • "Crisis Communications for any Organization," 2-2:30 p.m. (ET) Wednesday;
  • "How to Plan for a Power Interruption ... and Recover Fast," 2-2:30 p.m. (ET) Sept. 10;
  • "The Top 5 Steps for Preparedness This Year," 2-2:30 p.m. (ET) Sept. 17; and
  • "If You Do Nothing Else This Year ...," 2-2:30 p.m. (ET) Sept. 24.

S.F. paper notes Bay Area CUs' growth, 100M milestone

CU System
SAN FRANCISCO (9/2/14)--The San Francisco Business Times last week heralded the strength of California's Bay Area credit unions in an article that highlighted the national 100 million membership milestone.
"In the banking world, 100 million isn't a big number," the article's lead paragraph read. "After all, $100 million will pay a year's compensation for a handful of big-name CEOs. But 100 million is plenty big for credit unions. Membership nationally crossed the 100 million-member mark in June for the first time ever, according to the Credit Union National Association. Bay Area credit unions are tapping into this surge, adding loan products and services as well as expanding their branch networks."
The article included CUNA statistics that indicate credit union membership rose 2.9% over the past year as 1.7 million additional members were added, marking the fastest growth since 2000.
"There is clearly growing recognition about credit unions among consumers," Diana Dykstra, president/CEO of the California and Nevada Credit Union Leagues, told the Times. "They understand credit unions place their interests above all else, particularly in returning financial benefits to consumer members in the form of lower rates on loans, higher returns on savings, and lower and fewer fees."

The article described how credit union growth has occurred in step with publicity surrounding bank fee hikes and account balance requirements. Those actions aren't the case at most credit unions.

Patelco CU, Pleasanton, with $4 billion in assets, recently reduced 39 different fees, a strategic decision that is expected to save members $800,000 annually. Patelco also saw loan growth of almost 18% over the first seven months of 2014, compared with less than 18% gain in 2013. The credit union's product-per-member rate is 4.04, CEO Erin Mendez told the Times.

Credit unions built their reputation on auto loans, and San Francisco FCU, with $884 million in assets, continues to build relationships with that product, President/CEO Steven Stapp told the paper. When they finance their vehicles, members often switch other accounts to the credit union, and banks have created more opportunities for the credit union to market its free checking, Stapp said.

Bay Area credit unions also offer business loans. Santa Rosa-based Redwood CU expanded into member business lending in 2005 to meet member needs because members couldn't find credit elsewhere. Now member business loans account for $221 million in the credit union's lending portfolio.
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