WASHINGTON — Loans were flat in January, according to CUNA's monthly estimates, which is not unusual, but the 0.5% savings decrease for the month caught the eye of CUNA Chief Economist Bill Hampel.
Typically, on the lending side, he explained, "People rest up after the holiday spending season." Hampel added, "Savings were off though, down by half a percent, which is a bit unusual. We usually have a little bit of strength in savings in the beginning of the year. One of the reasons for that was that the 31st of January was a Wednesday, so payday came afterwards."
CUNA's data showed credit union credit card balances dropping 1.2% in January, but not nearly the 3.9% decrease from a year ago. Other loans (1.8%) and fixed-rate first mortgage loans (0.4%), and other mortgage loans (0.3%) led loan growth. Unsecured personal loans, adjustable-rate first mortgages, and used car loans all dipped slightly.
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He also forecast, "We're expecting loans to trail off this year and not match this year's growth, and savings to pick up a bit this year." Certificates and money market accounts increased 1.9% and 0.9% respectively in January, but share drafts saw a significant decrease, 6.2%, and regular shares were down 1.6%.
The loan-to-savings ratio reached 83%, "which I believe is the highest we've seen in a long, long time," Hampel observed.
Net worth nudged up yet higher in January to 11.5% while delinquencies were extremely low, holding at 0.5%.
At the same time, the banking industry's year-end data came out demonstrating another successful year in business. CUNA Vice President of Legislative Affairs Dean Sagar commented, "[T]heir industry earnings went up 8.8% and they were touting the fact that it was their sixth consecutive year of record profits…They also announced that deposits increased by 9.6% during 2006, so obviously credit unions are not hurting the banking industry despite the comments on advertisements they're putting out on Capitol Hill."
According to FDIC statistics, commercial banks and savings institutions reported $145.7 billion in net income in 2006, eclipsing the previous record of $133.9 billion set in 2005.
"The improvement in earnings can be attributed in part to strong growth in non-interest income at large banks, higher net interest income and lower expenses for bad loans," an FDIC release stated. –[email protected]
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