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CUNA Report: Savings Leads March CU Growth
Monday, May 8, 2017 6:20 AM

Credit union savings balances grew at a brisk pace in March, according to CUNA’s Monthly Credit Union Estimates. 

“Overall balances increased by 2.6 percent in the month—an astounding 31.2 percent annualized gain and the fastest monthly increase in five years,” said CUNA Senior Economist Mike Schenk. The March increase was a bit faster than February’s gain but the more recent month ended on a Friday, so it reflects big payday deposits.

Short-term liquid accounts reflect the fastest growth with regular shares increasing 4.9 percent and regular shares increasing 3.7 percent in the month. 

“As we noted last month, February and March typically reflect the fastest and second-fastest savings increases, respectively, because millions of members are parking tax refunds in their savings accounts,” Schenk noted.

Compared with previous calendar-year results, the 8.6 percent, 12-month increase in savings balances is the fastest seen since 2009 when balances grew 10.3 percent. Credit union savings account balances typically have grown at a rate of roughly 6.8 percent per year over the past 40 years. 

Credit union loans grew by only 0.9 percent in February, a weak result that was consistent with historical norms. March is historically the third-slowest month for loan growth with January and February increases also generally weak, mostly because members are paying off holiday credit purchases though tax payments also play a role.

Automobile lending once again stood out, with an overall increase of 1.5 percent, an 18.0 percent annualized increase. Used auto balances increased 1.5 percent and new autos were up 1.4 percent in the month. 

Overall, mortgage loan growth hit 0.8 percent, a 9.6 percent annualized gain, which was impressive against the backdrop of modestly higher mortgage interest rates in preceding months and tight housing supply issues, Schenk noted. Members are seeking to lock in low rates for the long haul—reflected in a 2.3 percent increase in fixed-rate mortgage balances and a 2.7 percent decline in adjustable-rate mortgage balances.

Over the past 12 months, credit union loan balances reflect a solid 11.3 percent gain. Compared with previous calendar-year results the year-over-year increase is the fastest seen since 2001 when balances grew 15.2 percent. 

Credit unions added nearly 600,000 memberships in March, a 0.5 percent monthly increase that matched the percentage gain CUNA reported in February. 

“Recall when we described February’s result we noted that it represented a 17-month high and the second-fastest monthly gain in six-and-one-half,” he said. 

The March gain is the 52nd consecutive monthly increase in memberships, extending a modern-day record for uninterrupted growth.    

“Over the past year, memberships are up 4.5 percent to a total of 110.7 million,” said Schenk. Compared with previous calendar-year results, this 4.5 percent jump is the fastest seen since 1986 when membership grew 5.9 percent. Memberships typically have grown at a rate of approximately 2.5 percent per year over the past 40 years. By comparison, the Census Bureau reports the U.S. population is growing at an annual rate of 0.8 percent.

Source:  CUNA