A combination of higher deposit yields and more members seeking financial safe havens has helped boost the savings at credit unions.
At $933 billion, savings were up 4.1% year to date and 6.0% since May 2012, according to CUNA Mutual Group’s July Credit Union Trends Report, which tracked data through May.
“Given the extremely low deposit yields, 6.0% annual growth is remarkable and reflects a combination of members seeking safe haven and possibly deposit yields higher than necessary,” Dave Colby, CUNA Mutual chief economist, wrote in the report.
Regular shares yielding 0.26% were up 6.4% year over year and have accounted for 34% of annual savings growth, according to the data.
Share drafts with a 0.28% yield climbed 10.9% since May 2012 and accounted for 22% of annual growth while money market accounts with a 0.37% yield posted 5.1% annual growth and supplied 19% of savings growth.
Certificates of deposit fell in May but were up 6.9% year to date and $9.4 billion or 4.5% since the same period in 2012. At 0.88%, the national average one-year CD yield is down five basis points year over year, the CUNA Mutual report said.
Meanwhile, looking at where members might see some economic optimism, Colby pointed to robust new light vehicle sales, a stronger housing recovery with sales and prices up and inventories down, and improving job growth.
“These bright spots bode well for credit union industry lending and credit quality results going forward,” Colby said.
Still, the economy has a way to go.
“While there are many positive economic signals, make no mistake, this recovery remains very fragile,” Colby said. “It depends on global economic and geopolitical stability and good decision making in Washington.”