For the first time since mid-2009, when the Cash for Clunkers program launched, Colby said credit unions posted a month-only gain in total vehicle loans. Although one month does not make a trend, it is positive, he pointed out. The one month gain reduced year-over-year contraction to 3.4%. Still, a slowdown in the rate of contraction is not growth, Colby added.

"Looking forward, given the uncertainties in vehicle supply [and the] Japan supply chain effect, energy costs and, most importantly, employment recovery, our forecast for new vehicle sales remains muted as consumers defer major purchases," Colby said.

Meanwhile, on a year to date basis, the only portfolio segments posting positive results were used vehicle loans (0.7%), adjustable-rate first mortgages (4.9%) and member business loans (1.7%), according to the report.

On a year-over-year basis, Colby said the gains in used vehicles, credit cards, fixed- and adjustable-rate first mortgages and MBLs were still not enough to offset the declines in other portfolio segments, especially new vehicles and second mortgages.

"We are not forecasting any significant changes in economic and environmental factors such as consumer spending on big ticket items or relative interest rate level," Colby said. "The credit union industry will struggle to generate positive growth in 2011."

In the first quarter, 60% of all credit unions or 4,455 of them, reported year-over-year loan portfolio declines. Included in this group were 90 credit unions with assets above $1 billion. Collectively, loan portfolios of the nation's credit unions are down 0.9% year to date and 0.7% on an annual basis. Colby said this is the 15th consecutive month of year-over-year declines. At $575 billion, total loans outstanding at were down $15 billion (2.5%) from their peak in October 2009.

Looking more closely at the data, there may be several links between a slowdown in loan growth and where members' priorities are. Total savings climbed 0.7% in April, bringing the year to date gain up to 3.7%. At $834 billion, savings are up $35 billion (4.4%) since April 2010.

"From a member perspective, households are rational and will continue to pay down higher-cost debt obligations versus build savings, which are losing ground to inflation," Colby said. "The forecast anticipates these credit union and member actions will not change through at least the end of 2011."

Members have a strong preference for highly liquid accounts such as regular shares, money market accounts and share drafts, Colby said. Since April 2010, more than 128% of the total savings increase was accounted for by liquid deposit accounts. Certificates of deposit, which represented 25.6% of savings, fell 5.2% to $11.7 billion since April 2010.

Credit unions continue to offer historically low deposit yields with one-year CDs at 1.17%, regular shares at 0.34% and MMAs at 0.55%. Colby said this is to dissuade large deposit inflows while managing the capital ratio and keeping the cost-of-funds low, given that 37% of all assets are in cash or lower yielding investments.

"A year ago we stated while many point to signs of economic recovery, member perceptions and actions [and a] lack of demand for new loans point to continued economic challenges," Colby said. "Not much has changed in a year."

In informal polls with credit union leaders, Colby said the lack of consumer loan demand, except for refinances, extreme regulatory uncertainty, looming cuts to nonspread revenue sources and continued erosion in the housing market are concerns cited most often. Those challenges are expected to continue through 2011 and well into 2012, he added.

"When the economy finally enters a sustainable recovery mode, managing in a rising interest rate environment will be the new challenge," Colby said.