Lending growth highlighted CUNA’s October Monthly Credit Union Estimates, with credit union loan portfolios on track for the fourth straight. year of double digit growth.
“This would be the first time that has happened since the 1980s, when loans grew in the double-digits for six straight years,” said Jordan van Rijn, CUNA senior economist.
Credit union loans outstanding grew 0.9% in October, compared with a 0.8% increase in September. Home equity loans led loan growth during the month, rising 2.2%, followed by adjustable-rate mortgages (1.6%), new auto loans (1.4%), other mortgage loans (1.2%), used auto loans (0.7%), credit card loans (0.6%), and fixed-rate first mortgages (0.2%).
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“The tremendous loan growth continues to be fueled by high demand for auto loans; car loans have already grown over 11% this year, representing the fifth straight year of double-digit auto loan growth,” van Rijn said.
Credit union savings balances declined 0.4% in October, compared with a 1.1% increase in September. One-year certificates led savings growth during the month with a 1.3% increase.
“We often see deposits and savings balances fall this time of year as members gear up for holiday-related expenses,” van Rijn said. “This year is no exception as member savings, shares, money market accounts and IRAs all decreased in October.”
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The loan-to-savings ratio increased to 83.1% in October from 82.1% in September. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) decreased to 13.8% in October from 14.6% in September.
Total credit union memberships grew 0.2% during October to 113.4 million. “Although October saw the slowest membership growth since January, overall credit union memberships are still on pace to grow at the fastest rate since the 1980s,” van Rijn said.
Credit unions’ 60-plus day delinquency remained at 0.8% in October.
The credit union system’s overall capital-to-asset ratio increased to 10.8% from 10.7% in September. The total dollar amount of capital increased 0.7% to $149.9 billion.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
