Credit Unions Continue To Push Down Dividends

Credit unions began the new year the same way they did last year by slashing savings rates to new lows.

Data compiled by DataTrac Corp. Shows that average rates paid by credit unions on regular shares shed another four basis points in the first week of 2003 to just 1.28%; while average rates on share drafts (checking) and money market accounts slipped three BPs each to 0.76% and 1.46%, respectively.

Average rates paid on CDs of all maturities also slipped a few BPs over the past week. DataTrac follows rates for more than 8,000 depository institutions, including 1,000 credit unions.

Despite the continued drop in savings rates, new funds continue to flow into credit unions, according to CUNA. Helped by a fifth payday during the month, another $8.4 billion of new shares flowed into credit unions in November, pushing credit union savings over the $500-billion mark for the first time, CUNA said. Credit unions added $52.5 billion of new shares for the first 11 months of 2002, just off the record $58-billion added for all of 2001 (see related story, page 9).

Lending continued to be propped up by real estate loans, with real estate loans accounting for virtually all of the $400 million in new loans added to credit unions' books during the month.

Through the first 11 months credit unions added $12.7 billion in new mortgage loans to their portfolios, including $8.3-billion of fixed-rate first mortgages.

Through the first 11 months of 2002 lending expanded by 6.7% and shares by 11.7%.

The surplus of new shares to new loans pushed the key liquidity indicator, the loans-to-shares ratio, down from 73.7% at the start of the year to 70.5% at Nov. 31.