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September CU loans rise less than expected
MADISON, Wis. (10/30/09)--Credit union loan balances rose a less-than-expected 0.09% in September, down from last year's pace of 0.53%, according to a Credit Union National Association (CUNA) economist’s analysis of CUNA’s monthly sample of credit unions. “Consumer credit demand remains weak in the face of serious adverse economic headwinds,” Steve Rick, CUNA senior economist, told News Now. “Job insecurity, stagnant wages, falling employment and high debt levels will weigh on loan growth into the first half of 2010.
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“Credit union fixed-rate, first-mortgage loan balances rose 1.1% in September, buoyed by low mortgage interest rates and the first-time homebuyer tax credit,” he added. “For the first nine months of the year, loan balances rose only 1.9%, down from 5.7% for the similar time period last year.” Following were unsecured personal loans (0.6%), other mortgages (0.5%), used-auto loans (0.3%), and credit card loans (0.2%). Home equity loans decreased 0.2%, and adjustable-rate mortgages and new-auto loans declined 0.4% and 0.7%, respectively. Credit union savings balances increased 0.1% in September and 8.6% during the first nine months of 2009. Individual retirement accounts for the month increased 2.1%, followed by regular shares (0.9%) and money market accounts (0.7%). One-year certificates and share drafts decreased 1.0% and 4.6%, respectively.
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“With loan growth so far this year less than half last year’s pace, deposit growth is almost double last year’s pace,” Rick said. “Credit union savings balances are up 8.6% in the first nine months of 2009, up from 4.8% last year. Credit union members are parking funds in money market accounts--18.2% growth year-to-date--and regular share accounts--9.8% year-to-date--rather than reinvesting their funds in certificate of deposits at the current low market interest rates. “This is helping to reduce credit union funding costs and boost net interest margins as higher-cost certificates of deposit roll into lower-cost core deposits,” he added. The movement’s overall capital-to-asset ratio increased to 10% in September. The total dollar amount of capital is $89 billion. Credit union 60+ day delinquencies increased to 1.8% during the month. “Credit quality continued to deteriorate with credit union loan delinquency rates rising over 1.77% in September, up from 1.69% in October and 1.01% last September,” Rick said. “With the economy still shedding a couple hundred thousand jobs each month, we can expect the delinquency rate to remain on its upward trajectory for the next few quarters.” The loan-to-savings ratio increased to 78.1%. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--remained constant at 19%.
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