MADISON, Wis.—For the first time in credit union history, CU savings balances rose above the $1-trillion mark, according to CUNA Mutual Group’s latest Credit Union Trends Report.
CU deposits topped the milestone in March, a month in which CUs increased their loan portfolios 0.6%, slightly less than the 0.65% pace reported in March 2014.
CUNA Mutual explained that March is historically the second-strongest month for savings growth due to tax refunds and bonuses, expecting savings balances to fall below one trillion dollars in April as members pay their tax bills.
Credit union memberships rose a robust 496,000 in March, or 0.5% month-over-month, up from 380,000 reported in March 2014, or 0.4%, to reach 102.8 million. The underlying annualized membership growth rate is now 4.0%, the highest since March 1997, CUNA Mutual said.
During the last 12 months, credit union loan portfolios increased 10.6%, the fastest pace since December 2005. Credit union credit card loan balances grew at a modest 4.8% seasonally adjusted annualized growth rate in March, due to low gas prices reducing the amount of credit used at gas stations, CUNA Mutual said.
Credit union used-auto loan balances grew at a 14.9% seasonally adjusted annualized growth rate in March, the fastest pace since November 1999, CUNA Mutual said. New-auto loan balances grew at a 24.2% seasonally adjusted annualized growth rate in March, the fastest pace on record. New-auto loan balances made up 38% of total loan balances in March, up from 35% in December 2012, due to the tremendous surge in new auto sales in the past few years.
Vehicle sales rebounded to a strong 17.1 million unit seasonally adjusted annualized basis in March, up from 16.2 million units in February. Sales were up 4% from March 2014. CUNA Mutual projects that car sales will increase 4% in 2015 to reach 17 million units, the strongest pace since 2001.
Credit union fixed-rate first mortgage loan balances jumped 3.1% in March, up from a 2.3% increase in March 2014. The rapid March mortgage volume was due to a surge in loan applications during January and February when mortgage interest rates fell, CUNA Mutual stated.
Home equity loan balances fell -1.4% in March as members used bonuses and tax refunds to pay down some of their lines of credit.
“Because of these seasonal factors, March is typically the weakest month of the year for home equity loan growth. However, credit union home equity loan balances grew at a 7.6% seasonally adjusted annualized growth rate in March, due to rising home prices, the improving job market, rising consumer confidence, consumers releasing pent up demand for durable goods, and lower interest rates,” CUNA Mutual said.
CU cost of funds fell to a record low 0.51% in the first quarter of 2015, from 0.53% in the first quarter of 2014. “We expect funding costs to rise later this year as short-term interest rates move up and members begin moving funds from low-rate core deposits to higher-rate share certificates and money market accounts,” the company said.
The credit union average capital-to asset ratio rose to 10.7% in March 2015, up from 10.6% in February, and above the 10.4% reported one year earlier. In the year ending in March, credit union capital rose a strong 8.7% while assets grew only 5.5%, which pushed up the capital ratio 0.3 percentage points.
“Capital ratios should climb to 11.2% by the end of 2016 as earnings and capital accumulation outpaces asset growth,” CUNA Mutual said.
The loan delinquency rate (loans two or more months delinquent as a percent of total loans outstanding) fell to 0.74% in March, down from 0.81% in March 2014 and less than half the 1.88% reported in February 2010.