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News Now

CU System
CU delinquencies fall but loan growth could be zero
MADISON, Wis. (10/31/11)--Although credit union loan delinquencies dropped to a cyclical low in September, this year could see no loan growth for credit unions, according to a Credit Union National Association (CUNA) economist's analysis of September's monthly  sample of credit unions.

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Credit union loans outstanding increased 0.04% during September, the sixth consecutive month of positive loan growth for credit unions. Fixed-rate mortgages led loan growth with a 2.2% increase, followed by used-auto loans (0.3%) and unsecured personal loans (0.1%). Credit card loans decreased 0.5%, home equity loans and new-auto loans both declined 0.6%, and adjustable-rate mortgages fell 2.2%. Credit union loans totaled $581.2 billion, compared with $582.5 billion in September 2010, said the monthly estimates.

"Credit union loan balances were essentially unchanged in September as loan originations were offset by loan amortizations, prepayments and charge-offs," Steve Rick, CUNA senior economist, told News Now. "It appears that 2011 will be the third consecutive year of zero loan growth. We expect loan balances to grow 3% in 2012. However, that will be due to rising job and income growth and the desire by members to release some pent up demand.

"On a brighter note, credit union 60-plus-day loan delinquency rates fell to a new cyclical low of 1.51% in September, down from 1.75% a year earlier," Rick said.

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Credit union savings balances increased 1.4% in September, compared to a 0.5% decrease in August. Share drafts grew 8%, followed by regular shares (1.4%), individual retirement accounts (0.7%), and money market accounts (0.4%). One-year certificates fell 0.5%. Credit union savings in September totaled $838.9 billion--or $1.7 billion more than the $797.2 billion in September 2010.

"Credit union savings balances rose a strong 1.4% in September because of the month ending on a Friday payday; share draft accounts rose by 8%," Rick said. "Savings balances are expected to rise 5% in 2011 with a similar number forecasted for 2012. Until now, members have preferred to pay down existing debt with any surplus funds rather than boost their savings balances."

The loan-to-savings ratio remained at 70%. 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%. The total dollar amount of capital is $99 billion.


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