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News Now

CU System
CUs savings is fastest growth since 2001
MADISON, Wis. (12/4/09)--Through October, year-to-date credit union savings balances rose 10.2%, setting up credit unions for the fastest growth since 2001, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions.
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Credit union savings balances increased 1.6% in October 2009 and 10.3% during the first 10 months of 2009. During October, share drafts rose 7.3%, followed by regular shares (2.6%), and money market accounts (1.8%). One-year certificates increased 0.8%, while individual retirement accounts decreased 0.6%. “With members in no mood to take on additional debt, credit union investment portfolios rose almost 30% so far this year,” Steve Rick, CUNA senior economist, told News Now. “This will put downward pressure on asset yields and net income as the asset mix shifts towards low-interest-rate investments and away from higher yielding loans.” Credit union loans outstanding decreased 0.1% during October 2009, but rose 1.8% during the first 10 months of 2009, down from a 6.1% increase during the same period of 2008.
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During October, home equity loans led loan growth, rising 2.3%, followed by used-auto loans (0.2%) and credit card loans (0.1%). Adjustable-rate mortgages decreased 0.1%, fixed-rate mortgages fell 0.4%, and unsecured personal loans declined 0.6%. New-auto loans and other mortgages decreased by 0.6% and 2.1%, respectively. “Credit union loan balances were essentially unchanged in October from September,” Rick said. “Mortgage, new-auto and unsecured loan balances all declined in October. The underlying loan growth trend cycle is now around 0.2% per month, the lowest since the recession of 1991. Loan growth will be weak in 2010--about 3% to 4%--due to low consumer confidence, a weak labor market and falling home prices.” Concerning asset quality, credit union 60-plus-day delinquencies remained roughly constant at 1.8% in October. “Credit union overall loan delinquency rates rose to 1.81% in October, up from 1.76% in September and 1.14% one year ago,” Rick said. “The jobless economic expansion and further declines in home prices will keep upward pressure on loan delinquency and charge-off numbers through the first half of 2010. “We believe net job creation and home-price stabilization will occur in the second half of 2010, slowing the deterioration in loan quality,” he added. The credit union movement’s overall capital-to-asset ratio remained constant at 10% in October. The total dollar amount of capital is $90 billion. The loan-to-savings ratio decreased to 76.9% in October. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--increased to 20% from 19% in September.
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