ONTARIO, Calif. (8/27/13)--Buoyed by an improving economy, lending at California's credit unions increased by 1.3% in the second quarter--the fastest second-quarter loan balance increase since the beginning of the recession in 2007, the California and Nevada Credit Union Leagues said.
Automobile financing led the surge with a 7.8% first-half jump in new-vehicle loans and a 6.3% rise in used vehicle loans. Unsecured personal loans also grew by 1.8% in the first half.
"It's clear the reports of California's heating up weren't a flash in the pan," said Dwight Johnston, economist for the leagues. "This improved economic outlook is building consumer confidence with near-record increases in new loan applications for big-ticket items ranging from homes to cars."
The state's unemployment rate dipped to 8.5% at the end of 1012, which while still elevated, represents a decline of nearly a percentage point in the quarter and of 1.3 percentage points since the start of the year. Also, California home prices increased by 5% in the first quarter and by 17% in the year ending in March--the most recent data available for the Federal Housing Finance Agency purchase-only index.
Meanwhile, statewide personal bankruptcy filings declined by 26% in the first half compared to year-ago levels, according to the Administrative Office of U.S. District Courts. California credit union borrower-bankruptcy filings declined even faster--by nearly 31%--in the same time period.
Despite the increased spending, the report found Californians continued to save. Credit union savings balances grew 3% in the first half and by 3.2% in the year ending June 2013.
With historically low market interest rates, consumers continue to focus on building short-term liquid accounts. Highlights include:
The state's credit unions report regular savings account balances grew by 6.9% in the first half;
Checking account balances increased by 5.4%; and
Money market balances rose by 1.4%.
The leagues' report is compiled from credit unions representing 53% of all federally-insured credit unions that collectively serve 96% of the members and manage 98% of the assets reported by such institutions located statewide.