WASHINGTON—Should the year-end data hold up, credit union membership in 2018 will have grown at its fastest rate since early in Ronald Reagan’s second term.
Meanwhile, auto lending growth, despite being in double digits, shows the slowest annual growth in auto lending since 2012, according to CUNA’s Monthly Credit Union Estimates for December 2018.
The same data show that overall, the credit union movement’s overall capital-to-asset ratio increased from 10.8% in November to 11.0% in December, according to CUNA’s Monthly Credit Union Estimates for December 2018.
The total dollar amount of capital for credit unions increased 1.4% to $162.3 billion, and total credit union memberships grew 0.4% during December to 118.8 million.
“The monthly estimates show that credit union memberships grew a very strong 0.36% in December, the fastest December growth since 1994,” said Jordan van Rijn, CUNA senior economist. “If that figure holds up, credit union memberships will have increased 4.52% in 2018, the fastest annual membership growth since 1986 and the first time that memberships have increased more than 4.00% for three years in a row since the 1970s.”
Credit union loans outstanding grew 0.6% in December 2018, matching the growth for November. Credit card loans led loan growth during the month, rising 2.0%, followed by fixed-rate mortgages (1.3%), unsecured personal loans (1.2%), new auto loans (1.1%), other mortgage loans (0.4%), and used auto loans (0.2%).
“There are signs that rising interest rates, lower consumer confidence, and increased uncertainty—particularly with regards to tariffs and the recent government shutdown—are starting to affect credit union loan growth,” said van Rijn. “The monthly estimates show that loans grew 0.58% in December, which would be the slowest December since 2012. Credit union loan portfolios are on pace to increase 9.1% in 2018, which would be the first time since 2013 that credit union loan portfolios have grown at less than 10.0% in a calendar year.”
On the decline during the month were home equity loans (-1.4%) and adjustable-rate mortgages (-0.04%).
There is growing evidence that rising interest rates are beginning to affect the mortgage market, CUNA stated. According to the monthly estimates, total first mortgages were up a strong 0.93% in December; however, HELOCs and second mortgages were down 0.76%,” van Rijn said.
“Overall, HELOCs are on pace for the slowest annual growth since 2013, and first mortgages are on track for the slowest growth since 2012. The data also reflect a shift towards adjustable rate mortgages, which are on pace to grow 10.65% in 2018, the fastest growth in adjustable rate mortgages since 2014.
Move Into Right Lane
“Credit union auto lending—which represents about one-third of credit union loan portfolios—also appears to be tapering off slightly,” continued van Rijn. “The monthly estimates show that total auto lending grew 0.60% in December, which would be the slowest December growth since 2013. Overall, the estimates show that auto loans grew 10.45% in 2018; if that figure holds up, it would reflect the slowest annual growth in auto lending since 2012.”
Credit union savings balances declined -0.1% in December, compared to a 1.5% increase in November. One-year certificates led savings growth during the month, rising 1.0%, followed by money market accounts (0.3%). On the decline during the month were share drafts (-2.2%), individual retirement accounts (-0.5%), and regular shares (-0.2%), van Rijn said.
The Deposit Data
“The December monthly estimates show that rising interest rates are affecting depositors as well: certificates of deposit grew 1.00% in December, the fastest December increase since 2008,” van Rijn said. “Overall, the estimates show CDs increased an incredible 11.45% in 2018, which would be the fastest annual growth in certificates since 2007. This may also reflect lower consumer confidence—which has fallen dramatically over the past few months—since households often shift from borrowing to saving when the outlook for the economy worsens or uncertainty rises.”
Credit unions’ 60+ day delinquency remained at 0.67% in December.
The loan-to-savings ratio increased from 85.2% in November to 85.8% in December. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) declined from 13.3% in November to 12.5% in December, van Rijn added.