MADISON, Wis.-Loan growth is hardly keeping pace with surging membership growth through the first two months of 2012, according to an analysis released last week by CUNA Mutual.
The data, released as part of CUNA Mutual's April Trends Report and based on CUNA data, show:
* Annual loan growth moved up to 1.9% in February thanks to contributions from first mortgages, used vehicles and member loans. "On a year-over-year basis, the strength of used vehicle loan growth moved total vehicle loans into the plus column," wrote CUNA Mutual Chief Economist Dave Colby. "Real estate loans are also making a positive contribution, but nowhere near results posted for 2002-2008. Growth improvements are forecast in 2012, but cautious consumers and historically low interest rates will preclude much stronger loan portfolio gains."
In terms of vehicle lending, the analysis suggests "Member demand for used vehicles is solid to improving in most markets. Year-over-year growth of 5.8% translates into $6 billion in additional loans. The current national average used vehicle loan rate is 4.45%. The 6.3% decline in the new vehicle component is a $3.9 billion decline. Our early forecast estimates show total vehicle portfolio growth above 2.0% in 2012, primarily due to less of a drag from the new vehicle component."
* While revised numbers show credit unions added 1.4 million new members in 2011, the data indicate that the 2012 gains are "exceptional," up 689,000 through February to 689,000, bringing total membership to 94.7 million (see related story, page 1).
* As of February, there were 7,315 CUs, reflecting a net loss of 264 CUs during the past year and 36 YTD. Data revisions show the CU system lost 246 CUs in 2011, 12 fewer than previously reported, CUNA Mutual said.
* Assets are up 5.3% year-over- year through February (and breaching $1 trillion in March). "Once again member deposits continue to flow into liquid deposit accounts and out of CDs."
* The capital-to-asset ratio was 10.2% on the strength of 7.9% capital growth. The loan-to-share ratio continues to recede and is 213 basis points below last year at 68.1%. The loan delinquency rate is 1.552%, "reflecting a trend of slow declines," Colby said.
* At $380 billion, surplus funds are up $40.5 billion (11.9%) from February 2011. This surge means 38% of industry assets (another record level) are in low-yielding investments. Two years ago this share was under 33%, Colby observed. "For most CUs, earning a positive spread on excess liquidity is a real challenge and this is reducing their ability to replenish capital. Given the current economic outlook, we do not see investment yields improving for at least two years."
The more detailed, full CUNA Mutual Trends Report can be found at www.CUllaborationNation.com.
