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CU System
CUs January loan-to-share ratio decreases
MADISON, Wis. (3/4/08)--With savings growth outpacing loan growth, the loan-to-savings ratio decreased to 84.4% in January from 84.6% in December, according to the Credit Union National Association’s (CUNA) monthly sample of credit unions for January 2008.
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The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus liabilities) rose to 18% in January from 17% in December. “The loan-to-savings ratio fell from its recent high in January as savings growth outpaced loan growth,” said Steve Rick, CUNA senior economist. “This indicates there will be a slight easing of liquidity pressure on credit unions. We expect this trend to play out through 2008. It will be another factor pushing down credit union earnings this year.” Rick mentioned some yearly trends as well. Credit union savings balances increased 0.43% in January 2008, the fastest January savings growth since 2004. Share certificate balances increased quickly, rising 2.08%--the quickest pace since 2001. Members continue to shun regular share accounts, which declined 1.8% in January and 7.4% over the last year. “On the loan side, real estate lending was the only category with growing balances in January,” Rick said. “Lower market interest rates increased fixed-rate mortgage balances by 1.74% and adjustable rate mortgages by 0.48%. Year-over-year, fixed-rate balances are up 17.4%, while adjustable-rate balances are up 12.7%,” he added. Credit union loans outstanding rose 0.2% in January 2008, compared with a slight decline in January 2007. “Other loans” led growth, rising 4.2%, followed by fixed-rate first mortgages and home equity loans, increasing 1.7% and 1.5%, respectively. Following the holidays, credit card loans outstanding decreased 1%. Also declining were new auto loans (0.8%), other mortgages (0.6%), and unsecured personal loans (0.3%). “While declining slightly in January, credit card loan balances are up 15.5% over the last 12 months, the fastest pace since 1996,” Rick said.
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Credit union savings balances rose 0.4% in January 2008, compared with a decline of 0.6% in January 2007. Certificates, individual retirement accounts, and money market accounts grew 2.1%, 0.7%, and 0.1%, respectively. Regular shares declined 1.8%, followed by share drafts (0.9%). In terms of asset quality, credit union 60-plus day delinquencies increased to 0.99% in January from 0.95% in December. The credit union movement’s overall capital-to-asset ratio remained at 11.5% in January. The total dollar amount of capital ended the year at $89 billion, an increase of 6.7% from one year ago.
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