Savings growth outpaced lending activity in March, according the latest Monthly Credit Union Estimates from CUNA.
Credit union savings balances increased 2.5% in March, compared with a 2.4% increase in February. Share drafts led savings growth during the month, rising 6.4%, followed by regular shares, which increased 3.1%, money market accounts, up 1.5%, individual retirement accounts, which rose 0.6%, and one-year certificates, with a 0.2% increase.
“The March monthly estimates showed big increases in savings, which is typical around this time of year when people receive their tax refunds,” said CUNA Senior Economist Jordan van Rijn. “Share drafts were up over 6% for the second month in a row, and regular shares were up over 3% for the second straight month.”
Credit union loans outstanding grew 1.1% in March 2018, compared with a 0.5% increase in February. New auto loans led loan growth during the month, rising 1.7%, followed by used auto loans (1.6%), fixed-rate first mortgages (1.3%), other mortgage loans (1.1%), unsecured personal loans (0.4%), and adjustable-rate mortgages (0.02%). On the decline during the month were home equity loans and credit card loans, which both declined 0.5%.
“There was also some indication in the March estimates that people used tax refunds to pay down credit card and other unsecured debt: credit card and unsecured lending were both down for the third straight month,” van Rijn said.
Auto lending shows no signs of slowing down so far this year, van Rijn noted. “In fact, despite a lot of news about declining auto demand, this is the fastest first-quarter increase in auto loans since 1995, well before the financial crisis,” he said. “However, this increase is likely due to a number of temporary factors, such as people spending their tax refunds and feeling wealthier from the recent tax cuts passed by Congress. CUNA economists continue to expect robust growth in auto loans through 2018, but expect increases in auto lending to level off a bit as pent up demand dwindles and interest rates rise.”
With strong savings outpacing loan growth, the average loan-to-share ratio fell to 81.5%, down from a recent high of over 84% in January. “This may please regulators as the ratio was reaching historic highs,” van Rijn said. "However, savings tends to be higher in the first quarter and taper off during the rest of the year, so we expect the loan-to-share ratio to creep back up in the coming months.”
Total credit union memberships grew 0.4% during March to 114.9 million.
Credit unions’ 60-plus day delinquency slightly declined to 0.8% in March from 0.9% during February.
The movement’s overall capital-to-asset ratio decreased to 10.4% in March from 10.5% in February. The total dollar amount of capital increased 1.2% to $152.1 billion.