Liquidity Tightening But Still Safe, CUNA Says
WASHINGTON -- While credit union liquidity is "tight by historical standards," it is still within safe and sound levels, CUNA reported in its September Monthly Credit Union Estimates for the month of July.
Loans outstanding grew 1.1% in July, the fastest increase since June 2006. CUNA chalked this up to a seasonal peak in lending. Credit cards led the way at 2.6% growth followed by fixed-rate first mortgages, which grew 2.3% during July. "Balances in each of these portfolios increased by about 15.5% over the past twelve months," the report read.
Savings on the other hand declined 1.3%, the biggest dip since August 1994. According to CUNA, this was mainly due to seasonal activity and the month starting after a Friday and ending on Wednesday and therefore avoiding a payday. Share drafts dropped 5.1% while regular shares fell 3.7% and IRAs were down 1.0%. Money markets and certificates however were each up approximately 1% in July.
"Despite the widely reported turmoil in mortgage and credit markets credit union loan quality remained near historic highs," CUNA said. Across all categories, loans over 60 days delinquent increased from 0.69% in June to 0.71% in July. Capital is rising and remains near historic highs at 11.5%.
Additionally, CUNA noted, "Credit union liquidity is tight by historical standards but aggregate benchmarks remain well within the comfort zone from a safety and soundness perspective." The loan-to-share ratio jumped to 82.6% in July from 80.7% the previous month. The liquidity ratio (surplus funds maturing in less than one year to borrowings plus other liabilities) ended July at 17.3%, about the same as a year ago.