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CU loans and savings fall in January
MADISON, Wis. (3/1/11)--January’s Monthly Credit Union Estimates report reflects little change in many of the key operating ratios the Credit Union National Association (CUNA) tracks: top-line results for asset quality, liquidity--measured both by the loan-to-share ratio and the liquidity ratio--and capital each are unchanged compared with year-end 2010 results, according to a CUNA economist’s analysis.
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Credit union loans in January totaled $575.4 billion, compared with 584.9 billion in January 2010. Credit union loans outstanding decreased 0.7% during January, compared with a 0.1% decrease in December 2010. Adjustable-rate mortgages led loan growth, declining less than 0.1%, followed by used-auto loans, unsecured personal loans, and fixed-rate mortgages, which decreased 0.3%, 0.7% and 1.2%, respectively. Home equity loans also dropped 0.1% while new auto loans fell 1.5% and credit card loans went down 2%. Loan portfolio contraction--a reflection of consumer debt reduction efforts--continued in January, though the pace of the reductions (-0.7%) accelerated slightly compared to December results (-0.1%), Mike Schenk, CUNA vice president of economics and statistics, told News Now. “This isn’t likely a harbinger of more dramatic declines: that’s because this looks like a typical pattern. On a seasonal basis, loan growth, especially credit card growth, tends to be relatively strong in December and then relatively weak in January as consumers concentrate on repaying holiday debts,” Schenk said. “So in the current economy, a slight decline followed by a slightly larger decline isn’t terribly surprising. “Having said this, we do expect loan demand to remain fairly weak in the first quarter and to increase weakly as the year progresses,” he added. “Labor markets will continue to have a big influence on confidence, spending and borrowing behavior. We expect labor markets to improve in 2011, though not substantially, so consumers will continue to exhibit this cautious behavior.”
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That also will mean that most savings growth is apt to be concentrated in short-term, liquid accounts. Few members will want to lock in longer-term low yields, Schenk said. Credit union savings in January totaled $802 billion--or $33.9 billion more than the $768.1 billion in January 2010. Credit union savings balances fell 0.2% in January, compared with a 0.5% increase during December 2010. Money market accounts led savings growth, rising 0.7%, followed by regular shares, which also went up 0.9%, and one-year certificates, which decreased 0.5%. Individual retirement accounts declined 0.9%, and share drafts dropped 2.4%. Credit unions’ 60-plus-day delinquencies remained constant at 1.7% during January. The loan-to-savings ratio stayed at 72% in January. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 19%. The movement’s overall capital-to-asset ratio stood at 10% in January. The total dollar amount of capital is $94 billion.


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