Loan Growth (Finally) Outpaces Savings During July

Loan growth at America's credit unions outpaced savings growth during July, boosting the industry's loan-to- share ratio to 69.2%, according to the latest numbers.

That's an increase from the 68.2% loan-to-share ratio recorded during June.

Members continue to pour savings into credit unions, albeit at a slower pace, with credit unions holding $537.4 billion in members' funds in July, up from $480.8 billion one year earlier. Savings declined 0.05% during July, but year-to-date savings are still up 7.6% from Jan. 1, according to CUNA. Money market accounts and regular shares grew 0.6%, while share drafts declined 2.3%.

CUNA noted in its analysis that the savings decline is seasonal, and that June, July and August are typically the worst months for savings growth.

Where To Put Funds?

Nevertheless, noted CUNA's economists, "With loan growth growing faster than savings, credit unions will need to put their funds where they will be most productive, into loans, instead of investments." The dollar amount of loans outstanding grew 1.3% during July, but that figure reflects closings on mortgage applications made in May and June, when rates were still low and hadn't bottomed out.

The fastest growing loan category was "other loans," up 6.1% during July, followed by ARMs (up 2.1%), used auto loans (1.7%), HELCs (1.4%), fixed-rate, first mortgages (1.4%) and new auto loans (1.1%).

Overall, said CUNA, year-to-date loan growth declined to 4.7%-down from 4.8% growth in July 2002. Capital remained steady at 10.6%.