Credit Union Trends Report

Dave Colby
April 28, 2010 | COMMENTS

Positive economic reports continue to be posted, but we are far from safely exiting the recession. Almost everyone agrees this was not a typical short-term economic correction, so why would you expect a typical recovery? Housing has not bottomed, the unemployment rate is likely to rise, and the credit markets are patched, but not repaired. For most of 2010, I believe consumers, businesses, and finance will remain very cautious and defensive. Round two of employment concerns is about to begin as state and local governments (and boards of education) wrestle with extreme budget shortfalls and the possibility of staff layoffs.

2010 will be a year of delicate balance between managing spreads, liquidity, credit quality, and capital levels at credit unions. That said, members still need credit and credit unions need the added basis points lending provides, if we are to rebuild capital.

At a high level, credit union results were little changed. Five more credit unions were added at year-end, but 732,000 fewer members. While growth revisions were mixed, the financial health of the credit union system in aggregate is solid.

At the end of February, CUNA estimates show 7,785 credit unions, reflecting a net decline of 257 institutions over the past year, well below the 320 average annual declines experienced over the past 10 years.

Savings and asset growth were revised down 0.3% for 2009. February 2010 results show slower growth with savings up 6.9% and total assets reaching $910 billion. We have passed the peak in our savings surge.

Not since 1982 has annual loan growth turned negative. The 1.1% YTD decline brought annual growth to -0.0%. Almost all major loans classes are down YTD. Our outlook continues to call for little or no growth until late in the year.

Membership was revised lower by 732,000 in 2009, but at 92.3million, is up 230,000 in the first two months of 2010.

The capital-to-asset ratio held at 9.9% while the loan-to-share ratio slipped sharply to 74.4% in February. The loan delinquency rate rose slightly to 1.878%. Data revisions had minimal impact on key ratios.

This is a summary of economist Dave Colby's April 2010 Credit Union Trends Report, published by CUNA Mutual Group. Find the complete report in the Resource Library at www.cunamutual.com.