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Savings grow loan-to-savings ratio lowest since 1994
MADISON, Wis. (5/3/11)--Credit unions savings continue to grow at a fast pace, while credit union loan balances still are declining, leading to the lowest loan-to-savings ratio since 1994, according to a Credit Union National Association (CUNA) economist’s analysis of March’s monthly estimates of credit unions.
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Credit union savings balances grew 1.3% in March, compared with a 1.8% increase during February. Regular shares led savings growth, rising 3.6%, followed by money market accounts (1.4%) and share drafts (1.2%). Individual retirement accounts grew 0.7%, while one-year certificates fell by 0.8%. “Savings growth continues at a relatively fast pace,” Mike Schenk, CUNA vice president of economics and statistics, told News Now. “Growth in credit unions’ savings accounts was 1.3% in March and nearly 3% in the first quarter. Short-term liquid accounts are growing quickly while balances and certificate accounts declined.” Credit union loans outstanding decreased 0.1% during March, compared with a 0.4% decline in February. Adjustable-rate mortgages grew 1.9% and fixed-rate mortgages increased 0.5%. Used-auto loans increased 0.5%, followed by credit card loans and home equity loans, which fell 0.7% and 0.8% respectively. New-auto loans dropped 0.6% and unsecured personal loans declined 1.3%.
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“Overall, loan balances continue to decline,” Schenk said, “though the ratio of decline eased from the prior month and from year-ago results. Loan balances declined 0.1% in March, and 1.1% in the first quarter. Loans dropped by 0.4% in February and by 1.4% in the first quarter of 2010. “Because savings growth continues to outpace loan growth, the loan-to-savings ratio once again declined--from 70.4% in February to 69.4% in March,” he continued. “This is the lowest reading since 1994. Interestingly, even though loan balances were declining, the delinquency ratio once again fell--from 1.67% in February to 1.60% in March. And this is the lowest reading since June 2009. “It’s important to remember that the first quarter is generally a quarter of relatively fast savings growth and slow loan growth,” Schenk said. “Loans should begin to grow in the coming months due to a combination of an expectation of stronger seasonal growth patterns, improving job markets, income gains--and resulting increases in consumer confidence.” Concerning asset quality, credit unions’ 60-plus-day delinquencies fell slightly to 1.6% during March 2011. The loan-to-savings ratio dropped to 69% in March from 70% in February. 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 March. The total dollar amount of capital is $94 billion.


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