Lending, Membership Growth Lead May MCUEs

Lending and membership growth led strong credit union results in May, according to the latest Monthly Credit Union Estimates.

Loans grew 1.3% in May, compared with an increase of 1.1% for April 2018. Adjustable-rate mortgages led loan growth during the month, rising 2.4%, followed by unsecured personal loans, which rose 2%, new auto loans, (1.9%), used auto loans (1.7%), home equity loans (1.1%), other mortgage loans (1%), and credit card loans (0.9%), and fixed-rate mortgages (0.2%).

Photo Courtesy of: CUNA Mutual Group

"As is common during the summer months, the May monthly estimates report showed big increases in auto lending: total auto loans increased 1.76% in May, the largest monthly increase in nearly four years,” said CUNA Senior Economist Jordan van Rijn. “This puts credit union loan growth on an annual pace of nearly 13%, with no signs of slowing down.”

According to Datatrac the national average rate on a five-year, $30,000 new car loan at a credit union is 3.25% today, while the comparable rate at commercial banks is 4.50%.  That means consumers now save an average of more than $1,000 over the life of a five-year car loan by choosing to finance at a credit union rather than a bank.

“The strong auto loan growth likely reflects the very low unemployment, strong economic growth and recent tax cuts, which put some extra money in people’s pockets,” van Rijn said.

Total credit union memberships grew 0.4% during May to 115.9 million. “Credit union memberships are now on track for annual growth of 4.71%,” van Rijn said.” This is the fastest membership growth by this time of the year since 2003.”

Photo Courtesy of: CUNA Mutual Group

Savings balances increased 0.1% in May, compared with a 0.7% decline in April. One-year certificate of deposits (CDs) led savings growth during the month, rising 0.5%, followed by money market accounts (MMAs) (0.2%). On the decline during the month were regular shares (0.02%), individual retirement accounts (0.1%), and share drafts (0.7%).

“Consumers may be starting to recognize the higher investment opportunities at MMAs and CDs, as checking account and regular savings deposits were both down in May, while MMAs and CDs grew,” van Rijn said. “In fact, CDs are up 2.83% so far through May, the largest increase since 2009.”

Credit unions’ 60-plus day delinquency decreased from 0.7% during April to 0.6% in May.

The loan-to-savings ratio increased to 83.4% in May from 82.4% in April. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) decreased to 13.4% in May from 14.2% in April.

The movement’s overall capital-to-asset ratio increased to 10.6% in May from 10.5% in April. The total dollar amount of capital increased 0.7% to $152.7 billion.