MADISON, Wis. — Credit union lending continues to improve, with loan portfolios rising by 1.2% in May, the biggest monthly increase in nine years, according to CUNA's monthly sample of CUs.
Credit unions have not increased their monthly loan growth figures this much since August 2005.
CUNA Interim Chief Economist Mike Schenk stressed that what is most important from the increase is the lending jump was seen across the entire loan portfolio.
New auto loans continue to perform, increasing 2.6%, followed by used-auto loans (1.6%), unsecured personal loans (1.2%), home equity loans (1.3%), adjustable-rate mortgages (1%), credit card loans (0.9%) and fixed-rate first mortgages (0.1%).
"The U.S. economy floundered a bit recently — with a nearly 3% contraction in overall growth in the first quarter," Schenk said. "But we view the weakness as temporary — largely reflecting the lingering effects of the government shutdown/furloughs late in 2013 and, more importantly, a brutal winter across much of the United States. The loan growth we're now seeing confirms our view that a second-quarter rebound is on the horizon."
Schenk predicts strong summer lending due to low interest rates and pent up borrowing demand. "That, of course, should help to boost credit union bottom-line results as lower-yielding investments are replaced with higher-yielding loans."
Savings balances were up as well, rising 1% in May compared with a 0.5% decrease in April. Share drafts (5.0%), regular shares (0.8%), and money market accounts (0.5%) increased during May. One-year CDs dropped (0.4%) as well as individual retirement accounts (0.2%).
