WASHINGTON—CUs are showing “unusually” strong loan growth in the first two months of the year, while savings increases are off last year’s early pace, according to CUNA’s latest data on credit unions.
“In February loans rose three-tenths of a percent, and in January they rose six-tenths of a percent,” said CUNA Chief Policy Office Bill Hampel. “That adds up to almost 1%. This is unusually strong in that in the first two months of a year an increase is unusual due to seasonal reasons.”
Hampel termed early loan growth better than CUs have seen in a decade, and that it being a leap year has nothing to do with the success.
“It’s just a strong start,” said Hampel.
Savings rose by 2.1% in February and 1.8% for the first two months.
“This is actually a weak beginning for the year with savings,” said Hampel, comparing the growth to last year. “Credit unions are up 1.8% for the year, compared with the 3% increase for the first two months of last year. So loans are starting out very strong and savings are starting out kind of weak, which is how we expect things to go the rest of the year.”
Hampel projected that savings will end the year at 5% growth and loans about 10%.
“This all means that with loans growing faster than savings, credit unions’ loan-to-share ratio continues to rise, possibly reaching 80% by the end of the year and 85% by mid-year 2016,” said Hampel, adding that if the forecast comes true, it will be the first time the ratio has been north of 80% since 2008—the beginning of the recession.