MADISON, Wis. (8/6/14)--On the strength of 0.3% membership growth in June, credit unions reached the milestone of 100 million memberships nationwide, as the Credit Union National Association announced its monthly credit union estimates.
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Credit unions attracted members at a record pace in the first half of 2014, which pushed total credit union memberships to 100.1 million at the end of June, according to Steve Rick, CUNA Mutual Group chief economist.
"The membership increase during the first six months was 25% faster than the similar time period one year earlier, averaging over 300,000 new memberships per month," Rick said. "In percentage terms, credit union memberships increased 1.8% year-to-date and 2.9% year-over-year."
Rick attributed the impressive growth to several factors: Credit unions' competitive auto loan interest rates and fees relative to banks, an increase in credit demand by the general public, lingering effects of Bank Transfer Day and relatively tight bank loan underwriting standards.
"Credit union memberships are now equal to 31% of the total U.S. population," Rick said. "And with the population growing less than 1%, the credit union membership to population ratio will continue to rise for the foreseeable future." (See related story: 100M memberships reached at CUs nationwide.)
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Also driving the surge in membership growth was a significant increase in new-auto loans. New-auto loan balances rose 3.3% in June, 11.1% year-to-date and 19.4% year-over-year, the fastest pace in almost 20 years.
"This extraordinary lending pace coincides with a nationwide annual auto sales pace of 17 million vehicles (cars and light trucks), which is above the long run sustainable rate of 16.5 million," Rick said.
"All loan balances are up 4.8% during the first six months of the year, twice the 2.4% pace set last year, with projections of hitting close to 10% for the year," he added. "This is setting the stage for credit unions to post the fastest loan growth since 2005. The surge in loan balances increased credit union loan-to-savings ratios 4 percentage points over the last year, from 68% in June 2013 to 72% today. This will increase credit union asset yields, net interest margins and ultimately credit unions' bottom lines in 2014."
Credit union savings balances declined 0.6% in June compared with a 1% increase in May. Money market accounts (0.7%) and individual retirement accounts (0.8%) increased during June. On the decline were share drafts (-5%), one-year certificates (-1.2%) and regular shares (-0.1%).
The loan-to-savings ratio increased to 71.9% in June from 70.6% in May. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--decreased to 16.4% in June from 17.7% in May.