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WASHINGTON-As expected, credit union loan growth plodded through the month of November as share growth continued to drop off. “Loan growth kind of muddled along but was half way decent in November,” CUNA Economist Bill Hampel explained. According to CUNA’s Monthly Credit Union Estimates, loans were up 0.6% in November. Adjustable-rate loans and credit cards grew 1.7% a piece, while home equity loans followed close behind at 1.6% in November. Comparing November 2004 to the same time last year, fixed first mortgages increased from 21.1% to 22.8% of the credit union loans. The percentage of total loans that adjustable-rate first mortgages make up increased from 8.6% in November 2003 to 10.3% in November 2004. Second mortgages and new car loans were also up slightly. In the same period, used car loans, a credit union staple, fell from 21.6% of credit union loans in November 2003 to 20.4% in November 2004. Credit union loan growth reached 9.8% for the year as of the end of November, and Hampel predicted loans would reach 10% once year-end figures come out. “So we’re running on target for loan growth to be the strongest since 2000 and actually savings growth is going to be even weaker than it was in 2000,” Hampel said. Savings sagged 0.3% for the month of November. Year-to-date savings numbers reached just 4.8% compared with 9.6% one year ago. Hampel said savings should end up just over 5% for the year. One-year certificates led growth at 1%, while money market accounts were up 0.3%. Share drafts fell 2.6%, regular shares were down 0.5%, and Individual Retirement Accounts decreased by 0.3%, CUNA’s figures showed. The loan-to-share ratio increased from 74% in October to 75% in November. However, most credit unions need not be concerned until that number approaches about 85%, Hampel advised. He explained, “It’s because of the economic cycle. It’s the fact the economy is picking up some steam. Consumer confidence is picking up so people are savings less and they’re spending more, that’s the biggest part of it. That also explains the increase in loan growth. “A little bit of it too is that short term interest rates have remained incredibly low.The stock market over much of the last year was looking a little better than it had for the previous several years, so there probably was a slight shift of money going back out of depository institutions like credit unions back into the stock market, reversing the flow that went on during the stock market tanking of the previous few years.” Credit unions capital to asset ratio is holding steady at 10.9% and asset quality is good with delinquencies at just 0.7% for the last nine months. -

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