Credit unions continue to make positive gains despite larger economic figures failing to live up to expectations, according to data released today by CUNA Mutual Group and the U.S. Commerce Department.
Commerce Department data shows a 1.2% uptick in the GDP during the second quarter of 2016, a figure borne out by the latest Credit Union Trends Report from CUNA Mutual, which found CU loan portfolios up by 1% in May (the most recent date for which data is available), along with an increase of 431,000 members (a 0.4% increase from the previous May). Overall loan balances were up 11% year over year, with loans growing faster and liquidity tightening (a loan-to-savings ratio increase of 2.8 percentage points year over year, to 77.6% for May).
Credit union lending has grown by 3.9% year-to-date, and every loan category reported positive growth. New auto loan grew by 20.6%, making new car loans the fastest-growing loan category every month since the start of 2015. Used car lending is just behind that, up by 16% during the last 12 months, but still trailing slightly behind the 16.6% growth rate for new car loans.
While loans are growing at a quicker pace than savings, the savings balance currently stands at 6.9% better than last year and well above the 5.4% average 10-year growth rate. Delinquencies also dropped by 20 basis points year over year, to 0.72% in May. But the report notes that delinquency rates "typically reach their lowest point in the second quarter of the year, so expect the ratio to begin rising in the second half of 2016."
Other highlights of the report include:
- *Home equity loan balances rose by 11.4%
- *Fixed-rate, first mortgage loan balances rose by 0.05%, down from 0.8% the previous year. That segment has shown little growth so far this year.
- *CUNA estimates that the number of credit unions at the end of May stood at 6,126, a decline of 291 from the same time last year, and an increase from the 260 lost during the 12 months that ended in May 2015.
'Growing Divide'
While there is much for credit unions to be pleased with in the May data, Curt Long, chief economist at the National Association of Federal Credit Unions, said Friday's Q2 data from the Commerce Department "highlights the growing divide between consumer sentiment…and business confidence," adding that consumers are generally bullish right now thanks to a strong stock market, rising real estate prices and cheap gas.
"The chief drag on the economy continues to be a dearth of business investment, which in the second quarter included a large downsizing of inventories," Long said in a statement. "But households are continuing to spend, and at the moment that is providing enough momentum to ward off a recession."
Long also pointed out that these figures are often revised, and subsequent reports could provide better numbers. The Q2 numbers came at the end of a week during which the Fed once again
