X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON-CUNA Chief Economist Bill Hampel had one word for credit union savings and loan activity in May: weird. “Typically the first third of the year is when all the savings come into credit unions and loan demand is kind of sluggish,” he said. “Then, in the middle of the year that switches and loan growth takes off and savings growth slows down. May is still the first part of the year when savings should be strong. Savings were actually down in May; loans were quite strong in May.” According to CUNA’s Monthly Credit Union Estimates, the dollar amount of loans outstanding grew 1.2% in May, the most since August 2004. Specifically, `other mortgages’ rose 2.5%, with adjustable rate first mortgages following at 1.9% growth. Home equity loans were up 1.8%, new auto loans increased 1.5%, and other loans grew 1.5%. Credit cards, fixed-rate first mortgages, used auto loans, and unsecured personal loans also all experienced growth On the other hand, credit union savings decreased 0.4% in May. Overall, year-to-date savings growth was down from 4.6% in May 2004 to 3.0% this year. Share certificates led growth at 1.3%, but individual retirement accounts came in at 0.3%. Share drafts fell the most with a 4.6% decrease, while regular shares were down 0.4% and money market accounts decreased 0.1% for the month. “This has happened before,” Hampel explained, “but we have the really unusual result that through May, loan growth at 3.5% is stronger than savings growth at only 3%. This is weird. “And what it suggests is a couple of things: One of them could be that the economy is stronger than a lot of people think and with a strong economy people don’t worry about savings and they rush out and spend. The other thing that I think is going on-and this is not just credit unions but all financial institutions-starting last June the Fed started pushing up interest rates and short-term interest rates have gone up a lot since then.but other financial institutions and credit unions have been slow in pushing up their rates on both sides of the market and so loan rates have become that much more attractive and savings rates have become relatively unattractive compared to other places.” Hampel said he believes it is really more of the latter. Credit unions’ loan-to-share ratio reached 75% in May, up from 73.7% last month. Hampel’s staff has also been tracking the delinquency rate, “because it’s odd this year.” In May it was down to 0.62%, a new record. He added that he is not sure why this is, but charge-offs have not moved so much downward, essentially remaining relatively flat. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.