CU loans, savings and asset trends see reversals in May

MADISON, Wis. (7/6/10)--The Credit Union National Association's (CUNA) monthly review of credit unions for May reflected three reversals in recent trends--in loans, savings balances and asset quality, according to a CUNA economist's analysis.

Click to view larger image Click for larger view
Credit union loans outstanding increased less than 0.1% during May, compared with a decrease of less than 0.1% during April. Credit union loans in May totaled $580.4 billion, compared with $583.4 billion in May 2009. Fixed-rate mortgages led loan growth. They increased 0.9%, followed by credit card loans and used-auto loans, which rose 0.8% and 0.6%, respectively. Unsecured personal loans climbed 0.4%, while both adjustable-rate mortgages and home equity loans increased 0.2%. New-auto loans decreased 1.5%.

"Loans grew in the month, on the heels of six consecutive months of declines," Mike Schenk, CUNA senior economist, told News Now. "While balances are still down on a year-to-date (-1.3%) and year-over-year (-0.5%) basis, the recent increase gives some hope that seasonal patterns will emerge with stronger buying and borrowing during the summer months.

"Most loan-types we track saw increases, with fixed-rate mortgages and credit cards, showing the largest percentage increases in the month," he said. "New-auto loan balances and fixed-rate second mortgage balances continued their respective declines."

Credit union savings balances decreased less than 0.1% in May, down from a 1.1% increase during April. Credit union savings in May totaled $798.2 billion, compared with $753.1 billion in May 2009. Individual retirement accounts grew 1.7%, followed by money market accounts (0.9%) and regular shares (0.2%). One-year certificates and share drafts decreased 0.8% and 2.3%, respectively.

Click to view larger image Click for larger view
"Savings balances declined in May after three successive months of fairly strong increases," Schenk said. "Balances are still up on a year-to-date (3.7%) and year-over-year (6.0%) basis, but seasonal patterns are likely to cause tepid growth or contraction in the coming months. Consumers continue to reflect a preference for short-term, liquid savings. Money market deposit accounts reflected the strongest percentage increase in the month."

Credit unions' 60-plus-day delinquencies remained constant at 1.8% during May.

"A third notable change was seen on the asset quality front," Schenk said. "Delinquencies, inched up in May after trending down for three consecutive months. Our expectation is that marginally improving labor markets and loan growth related to normal seasonal trends will both help to return delinquencies to their recent downward trend in the coming months."

The loan-to-savings ratio remained constant at 73% in May. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities-- remained at 19%.

The movement's overall capital-to-asset ratio remained at 10% in May 2010. The total dollar amount of capital is $91 billion.

"Of course, the double whammy of the Euro debt crisis and Gulf oil spill, combined with a 'de-stimulated' housing market and weak labor market gains, have bruised consumer confidence and underlined the fragility of the current recovery," Schenk said.

"In this environment, spending and borrowing will be constrained, but with the Fed on the sidelines and big differences between long-term and short-term interest rates, any loan growth at all will help to boost credit union bottom lines," he added.

print this story email this story
Resource Links
Monthly CU Data
Daily Financial Rates


More CU/System

Copyright © 2012 Credit Union National Association