MADISON, Wis.— Credit union loan balances rose 0.6% in November, slightly better than the 0.5% pace reported in November 2013, and rose a strong 10.5% during the last year, according to the latest Trends Report released by CUNA Mutual Group.
The report projects a robust market for job growth in 2015.
The report notes that with loan growth exceeding savings growth since March 2013, the CU movement’s loan-to-share ratio reached 74.5%, up from a 66.3% cyclical low set in March 2013. This shift toward loans pushed CU yield-on-asset ratios to 3.4% in the third quarter from 3.33% in the second quarter, the report states.
Among other findings in the Trends Report for November 2014:
- At the end of November, CUNA’s monthly estimates reported 6,543 CUs in operation, down 42 CUs from one month earlier. Year to date the number of credit unions declined by 252, above the 242 lost in the first 11 months of 2013.
- Credit union savings balances fell 0.1% in November, but rose 4.2% from one year ago. Year-over-year asset growth of 5.2% is outpacing savings growth due to borrowings rising 16% and capital rising 10%.
- The nation’s CUs increased their loan portfolios 0.6% in November, a slight acceleration relative to the 0.5% pace set in November of 2013. Loan balances rose 10.5% during the last 12 months, the fastest pace since January 2006.
- Credit union memberships rose 303,000 in November to reach 101.9 million, a 0.3% increase from October, and 3.6% year to date. Year-over-year, memberships are up 3.9%, the fastest pace since June 2003 when the economy was recovering from the 2001 recession, CUNA Mutual stated.
- Credit union capital grew 0.7% in November to help push the movement’s overall capital-to-asset ratio over 10.8%. Credit union loan delinquency rates fell to 0.77% in November, down from 1.03% set in November 2013. Credit union loan-to-share ratios reached a new cyclical high in November, breaching 74.5%, the highest since November 2010. This improved credit union bottom lines in 2014, and will continue to do so into the New Year, CUNA Mutual is projecting.
Overall, noted CUNA Mutual in the Trends Report, “Economic activity surprised on the upside in the third quarter with the government reporting the economy grew 5.0%, at a seasonally adjusted annual rate, and rose 2.7% year over year. Inflation moved in the opposite direction, plunging 0.3% in November as energy prices dropped 3.8%. Consumer prices rose only 1.3% during the last year, below the Federal Reserves’ 2.0% inflation target. The unemployment rate was unchanged in November at 5.8%, despite the economy adding 353,000 jobs.
“The stage is set for economic growth to exceed 3% in 2015 and the economy to generate over 250,000 new jobs each month,” the report projects. “This will put upward pressure on wages later in the year. The Federal Reserve will therefore seriously consider raising short-term interest rates sometime in the second half, albeit at a significantly slower pace than previous rate-tightening cycles in 1994 and 2004.”
The report adds that U.S. Households’ debt burden, measured by total-debt-to-disposable-income, fell to 97% in the third quarter of 2014, the lowest level since the third quarter of 2002, and down from the 124% record high set in the fourth quarter of 2007.
“The deleveraging phase of the business cycle appears to be coming to an end. So if households can keep their total debt growth rate less than or equal to the growth rate in disposable income, debt burdens will remain manageable,” the report states.