Influenced by troubles in the sub-prime credit markets, indicators point toward the increasing risks of a continued economic slowdown, according to analysis provided in the August 2007 Credit Union Trends Report  (551 KB/8 pages) newsletter.

The sub-prime woes are spilling over into other areas, highlighted by significantly tighter underwriting standards and higher credit costs, the monthly newsletter reports, using data compiled through June 2007.

“On the upside, it appears we may be seeing a stream of improving energy news and lower costs through year-end,” says Dave Colby, CUNA Mutual’s Chief Economist. “If positive energy trends continue, consumers will be more upbeat on spending plans.”

Other report highlights for credit unions:

• Annual loan growth of 6.7% in June contrasts with a 10-year average of 8.8%. Three-quarters of the $33 billion growth in total lending in the past year has been from real estate-secured loans.
• Through the first six months of 2007, total loans are up 2.9% vs. a 4.0% increase for the same period in 2006.
• Gains in loans, savings, assets, and capital in June kept key measures strong. The capital-to-asset ratio was a solid 11.3% in June, and the loan-to-share ratio rose to 81.0%. Capital growth held steady at 7.9%, and credit quality stayed healthy.
• There were 8,504 credit unions at the end of May, a net loss of 158 credit unions this year.
• Total credit union membership estimates are up to 89.64 million, a gain of over 1.4 million in the first half of 2007, which is a larger gain than all of 2006.

Tongue-in-cheek, Colby offered these words of caution: “This report is being written from the back seat of my car while on vacation. Typos may occur due to excellent scenery at national parks in Colorado and Montana, potholes, or my lack of focus.”

View the three most recent monthly Credit Union Trends Report newsletters.