Credit union savings balances increased at a robust 2.3% pace in February, according to CUNA’s Monthly Credit Union Estimates.
“That’s a staggering 27.6% annualized gain and the fastest monthly increase in five years,” said CUNA Senior Economist Mike Schenk.
Fast savings growth during the month is especially impressive because February ended on a Tuesday; the changes don’t reflect big payday deposits that sometimes boost these numbers. “That said, it’s important to point out that February is historically the fastest month for deposit growth because large numbers of members are parking tax refunds in their savings accounts,” Schenk noted.
Members kept deposits short and liquid--reflected in a big 5.9% monthly increase in share draft accounts, a 2.9% jump in regular shares, and a 1.5% gain in money market deposits accounts.
Compared to previous calendar-year results the 7.5%, the 12-month increase in savings balances is the fastest seen since 2009 when balances grew 10.3%. Credit union savings account balances typically have grown at a rate of approximately 6.8% per year over the past 40 years.
Credit union automobile lending continued at a brisk pace in February. New auto loans increased by 1% in the month (a 12% annualized gain), and used autos were up 0.8%, a 10.1% annualized pace.
Home equity loans increased 0.6%, and adjustable-rate mortgages rose 0.3%.
Historically, February reflects the slowest overall monthly increases in loan balances, and February 2017 was no exception. Despite fast auto loan growth, aggregate credit union loan portfolio balances were up by only 0.5% in the month because members remained firmly focused on paying down holiday credit card purchases, according to Schenk.
Still, over the past 12 months, credit union loan balances reflect a vigorous 11.5% gain. Compared to previous calendar-year results the year-over-year increase is the fastest seen since 2001 when balances grew 15.2%.
Credit union memberships grew 0.5% in February--a 17-month high and the second-fastest monthly gain in 6 1/2. The February increase is the 51st consecutive monthly increase in memberships, extending a modern-day record for uninterrupted growth.
“Over the past year memberships are up 4.3% - to a total of 110.1 million,” said Schenk. Compared with previous calendar-year results the 4.3% jump is the fastest seen since 1986 when membership grew 5.9%. Memberships typically have grown at a rate of approximately 2.5% per year over the past 40 years. And, by comparison the Census Bureau reports the U.S. population is growing at an annual rate of 0.8%.
If history is a good guide—and Schenk believes it is—March data should reflect a continuation of these broad trends with fast savings growth and relatively slow loan growth. However, the rest of the year will be dominated by healthy economic growth with strong labor markets, solid household income gains and only modestly higher market interest rates. “Overall, we continue to see these results as broadly supportive of strong credit union lending and healthy financial results during the rest of the year,” Schenk said.