Deposits Continue To Flow Out Of Credit Unions

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Members drained another $5.6 billion from their credit union accounts in May, one of the worst months ever for credit union growth, CUNA reported.

Since the end of March $8.5 billion of savings have flowed out of credit unions, as slow to negative growth is causing increasing concern for the movement.

Through the first five months of 2006 savings have grown a meager 1.7%, the slowest five months on record, according to the trade group.

For May share draft balances declined by 6.8%, while regular share balances fell by 1.4%. CDs and money market accounts showed slight increases of 0.9% and 0.7%, respectively.

Lending has also slowed to a five-year low, with loans expanding by just 2.8% the start of the year, down from 3.8% for the same period last year. Loans grew by 1% in May but all of the most important loan categories showed declines, as rate uncertainty seemed to affect members. In May, both ARM and fixed-rate mortgages declined by 1.4%, new car loans by 0.8%, used car loans by 0.3%, and home equity lending by 0.2%.

The higher lending pushed the key liquidity ratio, the loan-to-share ratio, up from 78.9% at the end of April, to 80.4% at the end of May.

Ed Roberts can be reached at robertscuj (c) 2006 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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