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Banks' 4Q Profit Up 37% --14th Consecutive Increase

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WASHINGTON (2/27/13)--Profits for U.S. banks increased 36.9% during fourth quarter 2012, the 14th consecutive quarter that their profits rose year-over-year, according to the Federal Deposit Insurance Corp. (FDIC).

They reported an aggregate net income of $34.7 billion, which was $9.3 billion higher than the $25.3 billion the FDIC-insured institutions reported in fourth quarter 2011. Increased noninterest income and lower provisions for loan losses accounted for most of the improvement, said the agency's latest Quarterly Banking Profile, released Tuesday.

For the full year, banks earned $141.3 billion, or 19.3% more than in 2011. It was the second-highest earnings reported by the industry since 2006's total of $145.2 billion.

"The improving trend that began more than three years ago gained further ground in the fourth quarter," said FDIC Chairman Martin J. Gruenberg. "Balances of troubled loans declined, earnings rose from a year ago, and more institutions of all sizes showed improved performance."

Other statistics from the report:

  • Total loan balances rose for the sixth of the past seven quarters by 1.6%;
  • The flow of money into deposit accounts increased 3% or $313.1 billion; and
  • The number of institutions on the FDIC's "Problem List" declined for a seventh consecutive quarter to 651 from 694, which compares to the 888 high at the end of first quarter 2011.
Sixty percent of all FDIC-insured institutions reported their quarterly net income improved from fourth quarter 2011. For more details, use the link to the full report.

FHFA Reports US Mortgage Interest Rates Rise

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WASHINGTON (2/ 27/13)--The Federal Housing Finance Agency (FHFA) Tuesday reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage contracts, was 3.35%, based on loans closed in January--an increase of 0.06 points from December.

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000

or less increased six basis points to 3.53% in January. The rates are calculated from the FHFA's Monthly Interest Rate Survey of purchase-money mortgages. The results reflect loans closed during the Jan. 25-31 period.

Typically, the interest rate is determined 30 to 45 days before the loan is closed, so the reported rates depict market conditions prevailing in mid- to late-December.

The contract rate on the composite of all mortgage loans--fixed- and adjustable-rate--was 3.34% in January, up six basis points from 3.28% in December. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.46% in January, up four basis points from 3.42% in December.

To see the FHFA report, use the link.

December Home Prices Increase Most In Seven Years

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WASHINGTON (2/27/13)--U.S. home prices in 20 cities increased in December, while 2012 saw the largest yearly rise in seven years, according to the S&P/Case-Shiller 20-city composite index.

The index of property values rose 6.8% in from December 2011--the largest year-to-year increase since July 2006. It follows a 5.4% gain in November from a year earlier (MarketWatch and Bloomberg.com Feb. 26).

The index recorded a 0.2% rise in December, following a 0.1% decrease in November. With seasonal adjustments, home prices rose 0.9% in December.  

Borrowing costs that are near a record-low and employment gains are stoking demand and bolstering property values, while foreclosures lessen and the number of homes on the market declines, Bloomberg said.   

That improvement is building up confidence and the net worth of households--which may fortify consumer spending, even though take-home pay is being eroded by a payroll-tax increase, Bloomberg added. 

Now is a good time to buy a home because of high affordability, attractive prices and low mortgage-interest rates, Brain Jones, a senior U.S. economist at Societe Generale in New York, told Bloomberg. The key is that positive economic forces are not coming just from a single area, but are broadly based nationwide, he added.

Consumer Rates

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Informa Research Services, Inc.
Daily Rate Comparison

Informa Research Services, Inc.
Deposit Products Credit Unions Bank Average Difference
12 Month CD $10,000 0.45% 0.28% 0.17%
Personal Savings $1,000 0.21% 0.10% 0.11%
Personal Interest Checking $2,500 0.35% 0.15% 0.20%
NSF Fee $27.87 $32.04 $-4.17
Personal MMDA $2,500 0.17% 0.10% 0.07%
Business MMDA $2,500 0.17% 0.09% 0.08%

Consumer Loan Products Credit Unions Bank Average Difference
Unsecured Personal Loan - $5,000 - 4 Years 10.15% 10.42% -0.27%
New Auto Loan - 5 Years 2.58% 3.83% -1.25%
Used Auto Loan - 2 year Old - 4 Years 2.76% 4.02% -1.26%
HELOC - 80% LTV - $50,000 4.13% 4.41% -0.28%
HE Loan - 80% LTV - $50,000 - 15 Years 5.68% 6.01% -0.33%

Mortgage Loan Products Credit Unions Bank Average Difference
30 Year Fixed Conforming 4.11% 4.19% -0.08%
30 Year Fixed Jumbo 4.21% 4.11% 0.10%
5/1 Year ARM Conforming 2.93% 2.88% 0.05%

Credit Card Products Credit Unions Bank Average Difference
Platinum 9.02% 10.81% -1.79%
Annual Fee $25.00 $58.20 $-33.20
Maximum Late Fee $26.03 $33.91 $-7.88
Reward 10.00% 12.06% -2.06%
Annual Fee $26.71 $101.27 $-74.56
Maximum Late Fee $22.58 $33.13 $-10.55

Indirect Auto Loan Products Credit Unions Bank Average Difference
Indirect A Tier New Auto Loan - 5 Years 3.60% 3.76% -0.16%
Indirect B Tier New Auto Loan - 5 Years 5.34% 5.30% 0.04%
Indirect C Tier New Auto Loan - 5 Years 7.52% 6.75% 0.77%

Averages displayed are straight averages of all institutions within the Informa Research Services database for the selected region as of Thursday, August 21, 2014. For detailed disclosures click here.

Business Rates

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Daily Financial Rates -- 2014-08-22

Financial Rates


Friday, August 22, 2014

03:55 AM CDT

TREASURY YIELD CURVE
(based on the $1 million market)

TermFri
8/22
Thu
8/21
Wed
8/20
Tue
8/19
Mon
8/18
1 month0.030.040.040.020.03
3 month0.020.040.030.030.03
6 month0.060.060.050.050.05
1 year0.100.120.110.100.09
2 year0.490.490.460.440.42
3 year0.950.940.900.890.86
5 year1.641.651.591.581.55
7 year2.082.092.052.041.99
10 year2.412.432.402.392.34
20 year2.922.952.942.922.86
30 year3.193.223.213.203.13

TREASURY BILLS

Results of the August 18, 2014 auction of short-term U.S. government bills, sold at a discount from face value in units of $10,000 to $ 1 million

TermLatest
Mon, 8/18
Week Ago
Mon, 8/11
13 weeks0.0300.030
26 weeks0.0500.050

PRIME RATE

3.25% Last changed December 16, 2008

FEDERAL FUNDS

TermFri
8/22
Thu
8/21
Wed
8/20
Tue
8/19
Mon
8/18
high0.3120.3120.3120.3120.312
low0.0500.0500.0500.0500.050
near closing bid0.0800.0600.0800.0700.070
offered0.1000.0800.1200.1000.280
effective rate20.1200.1100.1100.1100.110

FREDDIE MAC (Mortgage commitments, 30 days)

TermFri
8/22
Thu
8/21
Wed
8/20
Tue
8/19
Mon
8/18
30 year0.000.000.000.000.00

FANNIE MAE (Mortgage commitments, 30 days)

TermFri
8/22
Thu
8/21
Wed
8/20
Tue
8/19
Mon
8/18
30 year3.7793.7623.7263.7073.713

LIBOR

TermFri
8/22
Thu
8/21
Wed
8/20
Tue
8/19
Mon
8/18
1 month0.209000.210000.215000.214000.21600
3 month0.361000.365000.369000.365000.36600
6 month0.536000.534000.540000.534000.53900
1 year0.842000.842000.845000.841000.84400

COMMERCIAL PAPER (Financial, 90 days)

TermWeek ended
8/19
Week ended
8/12
90 days0.230.23

NA: Data not available at time of page generation (shown at top of page)

Sources:
Wall Street Journal
U.S. Dept. of the Treasury


All rates are from the previous business day unless otherwise noted.

CU CEOs' Confidence In Economy Rosier, Says Catalyst

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PLANO, Texas (2/25/13)--Credit union CEOs appear confident the economy is on the mend, said Catalyst Corporate FCU's quarterly CU CEO Confidence Index for fourth quarter 2012. The index topped 26 points for the third time in the past five years.

Fourth quarter's index was 26.66, up 2.63 points from third quarter. The average has been 20.09 since the recession began in fourth quarter 2007.

"There's no question that the fourth quarter survey shows CEOs' sentiment improving on current and future financial conditions," said Brian Turner, Catalyst Strategic Solutions' director and chief strategist. "This suggests that surviving the depths of recession and its accompanying protracted low-rate environment may have toughened CEO skins a bit and strengthened their internal countenances."

CEOs' optimism about their credit union's current financial condition saw the largest increase--4.74 points. The smallest uptick--1.11 points--was in expectations of share deposit growth six months into the future. Less than 3% of the responses across six questions fell into the negative category.

"Hopefully, they have come to realize how resilient their balance sheets truly are and have begun to adopt real-world relative value and return strategies, rather than applying remedies that suppress the volume of longer-term earning assets retained on their balance sheets," said Turner.

"CEO expectations are most likely on target," he said. "With economic growth projected to be around 2% for 2013, consumer spending is not likely to be much higher than it was in 2012. For 2013, this would portend moderate growth in loan demand and growth comparable to last year in shares."

CEOs' outlook for improvement at their credit union outpaced the outlook for members' future financial condition, even though CEOs indicated greater optimism in both, said Turner.

Although the overall credit union industry reported a 4.5% increase in loans outstanding for 2012, Turner said 85% of credit unions did not experience loan growth. "CEOs are expecting share growth to continue as members look for safety, rather than rates, on their funds."

Mark Herter, president/CEO of Farmers Insurance Group FCU, a $614 million asset, Los Angeles-based credit union heavily involved with business lending, told Catalyst he sees some improvement in the economy.

"In terms of number of loans booked, we continue to see increases year over year, but the speed at which mortgages are prepaying has increased," Herter said. "When we see large loans paid off early, we assume that members are doing well financially. We want to see our members improve their financial situations. The result, however, is that the credit union has ample liquidity, and our focus has to be on growing our loan portfolio."

Share growth in 2012 "significantly exceeded our projections, so we will not aggressively seek deposits until we see a loan-to-share ratio that makes us uncomfortable," Herter said. Roughly 98% of the credit union's field of membership is connected to Farmers Insurance Group. Even so, members' perceptions of the economy can vary widely, Herter said, because membership consists of both self-employed agents and corporate employees.

He noted that "the agents tend to be the borrowers, and the corporate employees tend to be the savers. The agents get more pessimistic about the economy when premiums increase, but they understand that it has to happen for the company to remain viable."

Catalyst's survey was based on responses from 259 member credit unions in January. It asked CEOs to evaluate current financial condition of members and the credit union; anticipated financial condition of both in six months, and the credit union's anticipated loan demand and share deposit growth in six months. For more information, use the link and go to "Links & Forms."

Fed Policymakers Debated When To Scale Down QE--FOMC Minutes

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WASHINGTON (2/21/22)--The Federal Reserve's monetary policymaking body, the Federal Open Markets Committee (FOMC), debated at its Jan. 29-30 meeting on when to scale down the third round of the central bank's additional bond asset purchases program, known as quantitative easing or QE3.

The minutes of the FOMC meeting, released Wednesday, said the committee discussed the possible benefits and costs of additional asset purchases.  These purchases involve $85 million in monthly bond purchases--$45 million a month of Treasuries and $40 billion in mortgage debt with no limit as to size of purchases and their duration.  At its January meeting, the FOMC voted to continue this policy and to keep the targeted Fed funds interest rate near 0% at least as long as unemployment remained more than 6.5% and inflation was projected at no more than 2.5%.

According to the minutes, most committee members commented this policy has eased financial conditions, helped stimulate economic activity, and helped keep inflation closer to the Fed's longer-run goal of 2%.

"However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases," according to the minutes. Several discussed "the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behavior that could undermine financial stability," said the minutes.

"Several participants noted that a very large portfolio of long-duration assets would, under certain circumstances, expose the Federal Reserve to significant capital losses when these holdings were unwound, but others pointed to offsetting factors and one noted that losses would not impede the effective operation of monetary policy," the minutes continued.

"A few" committee members also raised concerns about potential effects of further asset purchases on the functioning of certain financial markets, although others noted little evidence to date of such effects. The committee asked Fed staff for additional analysis ahead of future meetings.

Also of note: Several emphasized  the FOMC "should be prepared to vary the pace of asset purchases, either in response to changes in the economic outlook or as its evaluation of the efficacy and costs of such purchases evolved."  The minutes indicated that "a number of participants said the ongoing evaluation of the efficacy, costs, and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred."

A few committee members warned that in the past when policymakers had prematurely removed accommodation, there were "adverse effects" on economic growth, employment and price stability.

The committee also discussed the economic thresholds in its forward guidance on the path of the federal funds rate and noted that financial markets had adapted to the Fed's shift from data-based communication to guidance based on economic thresholds. A couple of committee members expressed that the policy tool would be more effective in the FOMC could communicate a consensus expectation for the fed funds path after a threshold was crossed.

To read the full minutes, use the link.

Consumer Sentiment Rose In February

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NEW YORK (2/19/13)--U.S. consumers' confidence in the economy rose in February to 76.3--higher than expected and the highest confidence rate in more than three months, according to the Thomson Reuters/University of Michigan preliminary index of consumer sentiment.

Economists surveyed by Bloomberg had predicted a median increase of 74.8 (Bloomberg.com Feb. 15). Confidence is up from 73.8 in January.

Consumers' sentiment reflects gains in the job market, property values and stocks' worth, which could help cancel the hits to consumers' wallets from higher gasoline prices and the 2% increase in payroll tax that became effective in January, said Bloomberg.

Single-family-home prices rose in about 88% of the nation's cities, reported the National Association of Realtors early last week. In January, the job market added 157,000 jobs--after December's gains of 196,000 and November's gains of 247,000. And the Standard & Poor's 500 stocks rose 5% in January, the biggest rise for the month since 1997.

Consumers in the survey said they expect inflation to hit a 3.3% rate during the next 12 months, which is unchanged from what they said in January.  Their expectations for the inflation rate over the next five years was 3%, compared with the 2.9% expressed in January.

Small Biz Slightly More Optimistic In January

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WASHINGTON (2/15/13)--Small U.S. businesses in January were slightly more upbeat than in November and December when small-business sentiment was at historic lows, according to the National Federation of Independent Business (NFIB).

The NFIB Small Business Optimism Index rose 0.9 of a point from December to 88.9--which is one of the lowest readings in the four-decade history of the index (Moody's Economy.com Feb. 12 and The New York Times Feb. 13). 

That indicates bleak economic expectations among small companies, with fewer firms planning to increase inventories or expand, and relatively few intending to make capital investments or hire, Moody's said. 

Bigger companies are more positive when looking at comparable measures--in part because large firms have a bigger footprint worldwide and see benefits from robust growth in countries such as China and India, the Times said.

Because small businesses are more tightly connected to the U.S. economy, poor domestic growth is impacting them more severely, Paul Ballew, chief analytic officer at Dun & Bradstreet, told the Times.

During times of heightened policy uncertainty and political gridlock in Washington, D.C., the gap in optimism between small and large companies appears to widen, the Times said.

Fewer businesses said credit is hard to get, but that percentage has remained consistent since July, Moody's said.

On Thursday, the Credit Union National Association and credit unions reintroduced in Congress legislation to raise credit unions' member business lending cap to 27.5% of total assets, up from the current 12.25%. Doing so would generate $14.5 billion available for MBLs--and increase jobs by 158,000 in the first year without costing the taxpayer, according to new statistics from CUNA. Enhancing credit unions' charter to include increased MBL authority is one of CUNA's top 10 priorities for 2013.

Small businesses have been at the core of the national economy's growth the past few years, according to a U.S. Small Business Administration (SBA) report issued this week. It indicated 2011 represented the second full year of economic expansion since the peak of the recession in 2009, with small businesses representing half of the private-sector output, SBA said (News Now Feb. 14).

Also, small firms with fewer than 500 workers outperformed large firms in net job creation in three of the four quarters of 2011--comparable to a pattern in periods when private-sector employment rose, which has existed since 1992, the SBA report said.

Consumers Cut Savings When Taxes Rise, CUNA Tells MarketWatch

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MADISON, Wis. (2/15/13)--A Credit Union National Association economist interviewed by MarketWatch Wednesday provided a reason why U.S. consumers' retail purchases increased at a slower pace in January: Taxes are up.

"Normally people reduce their savings when their tax rates go up," CUNA Senior Economist Steve Rick told MarketWatch in the article "Consumer purchases in January edge up 0.1%."

"It looks like consumers did drop their spending a bit. It may be signs of stress on lower- and middle-income people. They don't have much savings to begin with," he added.

A tax break put in place two years ago to spur the economy ended Jan. 1. Working Americans saw their taxes increase 2% last month and that increase may have had a dampening effect, said the article. 

Still, the U.S. is expected to remain on a modest growth path despite the headwinds in Washington, said the article. A steady pace of hiring, more business investment and improved exports should underpin growth, with stronger gains later in the year, said economists. "That will help offset the increase in payroll taxes," Rick said.

For the full article, use the link.

Auto Loans Hit Four-Year High--Equifax Report

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ATLANTA (2/13/13)--Auto loans in January were the highest in years on a number of levels, according to Equifax's National Consumer Credit Trends Report.

Balances on outstanding auto loans at the end of January totaled $782 billion, the highest in 48 months, while the number of existing loans totaled 59 million, a 42-month high, said the report.

Loans funded through credit unions, banks, and savings and loans totaled more than $372 billion,a 60-month high that raised their loans back to pre-recession levels, said Equifax. That compares with auto finance companies' loans totaling more than $409 billion, the highest level in 46 months.

Delinquency rates on auto loans decreased nearly 11% from January 2011, and auto loan and lease losses for the period dropped nearly 10%, said Equifax. Its report includes both loan and lease auto financing.

Sales of new cars and light trucks are rising steadily but are still below pre-recession levels of about 17 million units. "Yet auto lending, including leases, is now back to pre-recession levels, driven in part by the very attractive interest rates being offered on these loans and a gradual increase in willingness to lend to less-than-perfect credit borrowers," said Amy Crews Cutts, Equifax's chief economist.

Other data highlights from January through November 2012:

  • During the period, auto loans totaled $387.7 billion, a six-year high and representing nearly 46% of the $825 billion total consumer credit originated during that time.
  • Total number of new auto loans originated was 19.9 million, up more than 11% from the same period in 2011, also matching a six-year high.
  • New auto loans funded in November 2012 by credit unions, savings and loans increased nearly 13% to 857,300 from the previous November's 749,800.
  • Auto lending to subprime borrowers with origination risk scores of less than 640 increased more than 18% year-over-year, from 5.1 million to 6.1 million.

FTC study: 20% of credit reports have errors

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WASHINGTON (2/12/13)--One in five consumers had an error on at least one of their three major credit reports, with 5% of those consumers finding mistakes that could affect their credit score and result in their paying more for loans and insurance, according to a Federal Trade Commission (FTC) study.

The results from the study--the first of its kind and mandated by Congress--are

eye-opening" and "make it clear that consumers should check their credit reports regularly," said Howard Shelanski, director of the FTC's Bureau of Economics.  "If they don't, they are potentially putting their pocketbooks at risk."

Translated to actual numbers, the results mean that as many as 42 million consumers have errors on their reports, with about 20 million having "significant" mistakes (CNNMoney.com Feb. 11).

In the study, participants were encouraged to use the Fair Credit Reporting Act process to resolve any potential credit report errors, according to the FTC's press release.  The study also found:

  • One in four consumers identified errors on their reports that might affect their credit scores;
  • One in five had an error that was corrected by a credit reporting agency (CRA) after it was disputed;
  • Four out of five consumers who filed the disputes received some modification to their credit report;
  • More than one in 10 consumers saw a change in their credit score after the CRA modified the error; and
  • Roughly one in 20 consumers had a maximum score change of more than 25 points, while one in 250 consumers had a maximum score change of more than 100 points.
The three largest credit bureaus--Experian, Equifax and TransUnion--maintain credit reports for about 200 million consumers, says CNN.

The Consumer Data Industry Association, in a press release, pointed out that 98% of the reports are materially accurate.

Congress directed the FTC to study credit report accuracy and provide interim reports every two years, beginning in 2004 through 2012, with a final report in 2014.

US trade deficit drops

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WASHINGTON (2/11/13)--The U.S. trade deficit narrowed more than expected in December, with record petroleum exports boosting the economy, said the Commerce Department Friday. Petroleum imports fell to their lowest level in more than a decade.

The U.S. trade gap in international goods and services declined 20.7%--to $38.54 billion from a revised $48.61 billion (down from the original $48.7 billion estimate) for November. December's is the biggest deficit contraction in four years (The Wall Street Journal Feb. 8).

A survey of economists by Bloomberg forecast the deficit to shrink to $46 billion (Bloomberg.com Feb. 8), while economists surveyed by the Journal expected it to shrink to $45.5 billion. December's data indicate a stronger economy that originally thought in fourth quarter, said both publications.

For 2012, the trade deficit dropped 3.5% to a $540.4 billion gap--down from $559.9 billion in 2011.

A Commerce Department report on Jan. 30 indicated the economy shrank at a 0.1% annual rate during the fourth quarter 2012, with the biggest drop in defense outlays in 40 years. Exports declined at a 5.7% annual rate, the largest since the first quarter of 2009, which caused a widening of the trade gap that trimmed the gross domestic product by 0.25 percentage point.

Consumer debt rises $146B in Dec, also up at CUs

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WASHINGTON (2/8/13)--Consumer debt increased in December by $14.6 billion to $2.778.2 trillion--an annual rate of 6.25% and up 6.5% for the fourth quarter.  Overall borrowing rose for the fifth consecutive month, with non-revolving credit increasing the most in 11 years, said the Federal Reserve's Consumer Credit report.

At credit unions, members borrowed $243.9 billion during the month, a $1.3 billion increase over November's $242.6 billion and better than the $223 billion borrowed a year earlier, said the Fed's report, which was released Thursday afternoon.

Economists polled by Reuters had forecast a $14.59 billion increase in debt (FoxBusiness Feb. 7), while economists polled by Bloomberg called for a $14 billion increase (Bloomberg.com Feb. 7).

Leading the overall debt increase was a 9.5% annualized increase in nonrevolving credit--such as auto loans and student loans. Nonrevolving credit for December was $1.928.4 trillion, compared with $1,910.2 trillion in November and $1,780.1 trillion at year-end 2011.

Nonrevolving debt at credit unions for December totaled $205 billion, up $2.3 billion from November and up $19.9 billion from a year earlier. In November nonrevolving debt totaled $202.7 billion; in December 2011, it totaled $185.1 billion.

Consumers' credit card or revolving debt declined $3.6 billion in December to $849.8 billion, compared with November's $853.4 billion. A year earlier, revolving debt totaled $847.3 billion, said the Fed report.

At credit unions, revolving debt totaled $38.9 billion in December, a drop of $1 billion since November but higher than the $37.9 billion loaned in fourth quarter of 2011.

The Fed's credit statistics do not include real-estate related loans such as mortgages or home equity lines of credit.

For the full report, use the link.

Banks still tight on loans: Bad news for small biz, consumers--CUNA (02/07/2013)

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WASHINGTON (2/6/13)--Very few U.S. banks have eased their lending standards across major loan categories during the fourth quarter, even though demand for auto loans, business loans and prime residential mortgages increased. That's bad news for borrowers, including small businesses, says the Credit Union National Association.  

Demand for other types of loans was essentially unchanged, according to the Federal Reserve's January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices. U.S. branches and agencies of foreign banks, which mainly lend to businesses, reported little change in their lending standards, while demand for their loans was reportedly stronger.

Banks' tight lending practices provide an opportunity for credit unions to fill the consumer lending and member business lending void as they continue to lend during times of stringent credit, said CUNA.

"The data make it clear that bank underwriting hasn't changed much in the recent past--that's bad news for the nation's small businesses and consumers," Mike Schenk, CUNA vice president of economics and statistics, told News Now.   

"Bank loans overall have declined by 5% since the beginning of the economic downturn at year-end 2007, and bank business loans outstanding have declined by 6% over that same time period," he added. "In contrast, the nation's not-for-profit, member-owned credit unions have remained in the game and continue to lend." 

Overall credit union loans outstanding have increased 12% since the downturn, and loan originations at credit unions were 30% higher in the first three quarters of 2012--the most recent data available--compared with the comparable period in 2011, Schenk explained.  Credit unions have been especially helpful to the nation's small businesses--while bank loans declined since 2007, credit union business loans increased 51%--an average of 9% per year.

Credit union business loans grew 6.2% in the year ending September 2012, Schenk added. The 6.2% increase is a bit lower than the average increase in previous years because more and more credit unions are bumping up against an arbitrary 12.25% of assets business loan cap, he said.

"Clearly, with banks reluctant to lend and more credit unions ready, willing and able to do so--but facing regulatory constraint--the time for Congress to act and remove the arbitrary cap is now," Schenk said. "Putting Americans back to work should be job one--and removing the cap would do just that. CUNA estimates that additional credit union lending would lead to a total of 150,000 new jobs created in the first year after enactment of H.R. 1418 and S.2231."

On the household side, domestic banks reported that standards for both prime and nontraditional mortgages were essentially unchanged the past three months, the Fed report said. Respondents indicated that demand for prime residential mortgages increased, on net, while demand for nontraditional residential mortgages was unchanged.

Within consumer lending, a fraction of domestic banks reported easing standards on auto loans, while standards on other types of consumer loans were unchanged. A moderate fraction of respondents continued to experience stronger demand for auto loans, while demand for credit card loans was unchanged.

Regarding the outlook for the quality of business loans, about 40% of domestic banks said they expect delinquency and charge-off rates on their commercial and industrial loans to decline in 2013.

Most refinances maintain or reduce debt levels

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WASHINGTON (2/6/13)--Most U.S. homeowners who refinance continue to strengthen their fiscal house--maintaining or reducing their mortgage debt last quarter, according to results of Freddie Mac's fourth-quarter refinance analysis.

"On average, borrowers who refinanced reduced their interest rate by about 1.8 percentage points," said Frank Nothaft, Freddie Mac vice president and chief economist. "On a $200,000 loan, that translates into saving about $3,600 in interest during the next 12 months. Fixed-rate mortgage rates hit new lows during December, with 30-year product averaging 3.4% and 15-year averaging 2.7% that month, according to our Primary Mortgage Market Survey."

Salient facts in the report indicate:

  • In the fourth quarter, 84% of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying in additional money at the closing table. The percentage is just short of the record 85% in the fourth quarter 2011. Of these borrowers, 46% maintained about the same loan amount, and 39% of refinancing homeowners reduced their principal balance.
  • The average interest-rate reduction was about 1.8 percentage points, or a savings of about 33% in interest, the largest percent reduction recorded in 27 years of analysis.
  • The net dollars of home equity converted to cash in a refinance, adjusted for consumer-price inflation, remained at a low volume. In the fourth quarter, an estimated $8.1 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, down from an estimated $8.2 billion in the third quarter and substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006. 
  • In the 10 largest metropolitan areas, those that experienced the more severe property value declines tended to have older loans, very little cash-out and larger percentage declines in mortgage rates.

Banks still tight on loans: Bad news for small biz, consumers--CUNA

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WASHINGTON (2/6/13)--Very few U.S. banks have eased their lending standards across major loan categories during the fourth quarter, even though demand for auto loans, business loans and prime residential mortgages increased. That's bad news for borrowers, including small businesses, says the Credit Union National Association.  

Demand for other types of loans was essentially unchanged, according to the Federal Reserve's January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices. U.S. branches and agencies of foreign banks, which mainly lend to businesses, reported little change in their lending standards, while demand for their loans was reportedly stronger.

Banks' tight lending practices provide an opportunity for credit unions to fill the consumer lending and member business lending void as they continue to lend during times of stringent credit, said CUNA.

"The data make it clear that bank underwriting hasn't changed much in the recent past--that's bad news for the nation's small businesses and consumers," Mike Schenk, CUNA vice president of economics and statistics, told News Now.   

"Bank loans overall have declined by 5% since the beginning of the economic downturn at year-end 2007, and bank business loans outstanding have declined by 6% over that same time period," he added. "In contrast, the nation's not-for-profit, member-owned credit unions have remained in the game and continue to lend." 

Overall credit union loans outstanding have increased 12% since the downturn, and loan originations at credit unions were 30% higher in the first three quarters of 2012--the most recent data available--compared with the comparable period in 2011, Schenk explained.  Credit unions have been especially helpful to the nation's small businesses--while bank loans declined since 2007, credit union business loans increased 51%--an average of 9% per year.

Credit union business loans grew 6.2% in the year ending September 2012, Schenk added. The 6.2% increase is a bit lower than the average increase in previous years because more and more credit unions are bumping up against an arbitrary 12.25% of assets business loan cap, he said.

"Clearly, with banks reluctant to lend and more credit unions ready, willing and able to do so--but facing regulatory constraint--the time for Congress to act and remove the arbitrary cap is now," Schenk said. "Putting Americans back to work should be job one--and removing the cap would do just that. CUNA estimates that additional credit union lending would lead to a total of 150,000 new jobs created in the first year after enactment of H.R. 1418 and S.2231."

On the household side, domestic banks reported that standards for both prime and nontraditional mortgages were essentially unchanged the past three months, the Fed report said. Respondents indicated that demand for prime residential mortgages increased, on net, while demand for nontraditional residential mortgages was unchanged.

Within consumer lending, a fraction of domestic banks reported easing standards on auto loans, while standards on other types of consumer loans were unchanged. A moderate fraction of respondents continued to experience stronger demand for auto loans, while demand for credit card loans was unchanged.

Regarding the outlook for the quality of business loans, about 40% of domestic banks said they expect delinquency and charge-off rates on their commercial and industrial loans to decline in 2013.