Recession slowing growth of CU lending

MADISON, Wis. (7/30/09)--The ongoing recession is taking its toll on credit union lending, according to a Credit Union National Association (CUNA) economist's analysis of CUNA's monthly sample of credit unions for June.

"For the first six months of the year, credit union loan balances rose 0.7%, significantly lower than the 3.1% reported for the same period last year," Steve Rick, CUNA senior economist told News Now. "Americans are deleveraging their balance sheets by paying down debt or slowing their debt accumulation.

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"Credit unions should expect the loan portfolio to rise 5% this year, below the past five-year average of 8.4%," he added.

Credit union loans outstanding, which totaled $584.5 billion, increased 0.2% during June. It also increased 0.7% during the first six months of 2009, down from a 3% increase during the same period of 2008. Fixed-rate mortgages led June loan growth, rising 1.5%, followed by credit card loans (1.4%), unsecured personal loans (0.9%), used-auto loans (0.7%), and home equity loans (0.2%).

However, during this period, new-auto loans declined (-0.3%), as did other mortgages (-0.6%), other loans (-0.9%) and adjustable-rate mortgages (-1.6%).

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Credit union savings balances totaled $754.5 billion for June, declining 0.2%, but grew 8.2% during the first six months of 2009. During this period, money-market accounts led savings growth with a 1.5% increase, followed by regular shares, which increased 1.1%.

Also during this period, one-year certificates essentially remained constant--increasing less than 0.05%--while individual retirement accounts and share drafts declined 1.1% and 5.6% respectively.

"With fears of job losses on the minds of many Americans, the U.S. savings rate rose to 6.9% recently," Rick said. "Credit union savings balances have responded with an 8.2% rise in the first half, up from 6.4% last year."

Regarding asset quality, credit union 60-plus-day delinquencies declined to 1.5% in June from 1.7% in May.

The loan-to-savings ratio decreased slightly to 77.5% in June. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities-- remained constant at 20%.

The movement's overall capital-to-asset ratio increased to 9.8% in June 2009. The total dollar amount of capital is $88 billion.

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