MADISON, Wis. -Smaller credit unions seeking merger partners mayfind it a bit easier due to the growing number of communitycharters and overlapping charters. This, according to the latestCUNA Mutual Group's Credit Union Trends Report. At the end of May,CUNA Economics & Statistics estimates there were 9,217 creditunions reflecting a year-to-date decline of 129 institutions and anet loss of 350 over the past year. "The factors which led to thedecline of credit unions in 2004 have not gone away," said DaveColby, CUNA Mutual chief economist. "Competitive pressures continueto escalate, as do member expectations and the costs to meet memberneeds. Thus, we believe current results may slightly underestimateactual trends. We are holding our current forecast at a net declineof 371 CUs in 2005." Meanwhile, Colby said more aggressivemarketing has helped membership numbers as purging inactive or lowbalance accounts "may have run its course." May saw nearly 150,000new members adding to the 87.2 million total industry number."Additionally, field-of-membership expansions (community chartersand SEG additions) are now paying dividends," Colby said, adding"these conclusions are based on anecdotal information, not hardfacts." The annual membership growth rate is now a solid 2.0%,according to the report. Colby said CUNA Mutual's early forecast ofa net increase of 1.2 million members in 2005 will understateactual results and will hold at this forecast level untilsemi-annual revisions are complete based on mid-year NCUA mid-yearcall report data. With five months left in the year, it remains tobe seen what the final outcome will be for membership and creditunion numbers, but the savings outlook took a downturn in May,dropping nearly $3 billion. "The sharp plunge in share draftsindicates May's results were due to payroll timing," Colby said."The larger trend of slowing growth is concerning. Year-over-yearsavings growth has now fallen to 3.8%, the slowest rate of increasesince August of 2000." While deposits are up 2.3% and a little over37% are regular shares, growth here over the past year is under 1%,the report noted. Since the beginning of June 2004 to the end ofMay 2005, the Federal Reserve's Open Market Committee raised theFed Funds Target Rate by 200 basis points, Colby said. Creditunions have responded by raising share draft and regular shareyields by less than 10 basis points. Money market accounts are upjust 39 basis points and CD rates were boosted 126 basis points.CDs supplied 49% of the YTD gain in total savings and over 71%since May 2004. "With one-year CD yields at 3.00%, we assume mostof the recent gains have come from "odd maturity" CDs with yieldsmore in line with competitive market conditions," Colby pointedout. Total assets fell in May and now stand at $690 billion, upjust 4.8% over the past year. Loan growth is also a mixed bag withtotal portfolio growth only up 3.5% through the first five monthsof 2005. At $444 billion, credit unions have added $43 billion inmember loans to their books over the past 12 months. This gain isnet of loans sold, payoffs and the usual amortization, Colby said,adding annual loan growth improved to a "very respectable" 10.7% inMay. As interest rates rise throughout the year, annual gains areexpected to slow down, CUNA Mutual [email protected]