Economic Environment Likely Will Get Worse, ‘CU Trends Report’ Says

April 10, 2008

Economic conditions have not improved over the past month, and economic observers agree that things will likely get worse before they get better, according to analysis provided in the April 2008 Credit Union Trends Report (248 KB/8 pages) newsletter.

The bad news was highlighted by a 232,000 first-quarter U.S. job loss and a slump in consumer sentiment to new lows, acknowledges CUNA Mutual Chief Economist Dave Colby. “These are truly unique times with the Fed, Treasury, and Congress taking significant steps with unprecedented speed,” notes Colby.

The monthly report, published by CUNA Mutual using data compiled through February 2008, still holds out hope for credit unions. “We can seize the moment to improve members’ financial lives and create an enduring place for CUs in consumer finance,” says Colby.

Other report highlights for credit unions:

Loans grew at a 7.0% annual rate in February, surprising given CUNA’s year-end data revisions that reduced estimates of total loans by $6 billion (1.1%) in 2007.
Growth in vehicle loan, which account for one-third of overall credit union lending, moved into negative territory in February, declining at a 0.6% annual rate.
Real estate-secured loans (12.6% annual growth), member business loans, and credit cards (13.8%) were the primary drivers for growth. “This is a bit disconcerting,” says Colby, “given the economic environment in general and the housing market and employment outlooks in particular.”
The loan-to-share ratio fell from 84.4% to 80.7% due to data revisions and strong deposit inflows, and the capital-to-asset ratio declined from11.5% to 11.1%. “Credit quality continues to be a challenge even with the loan delinquency ratio just under 1.0% in February,” Colby says.
At $804 billion, assets continued its strong climb with 8.6% annual growth. Savings also rose at a robust 7.5% rate.
There were 8,346 credit unions at the end of February 2008, a net loss of 50 for the year and 286 over the past year.
Total credit union membership stood at 89.9 million after data revisions dropped 2007 membership estimates by 383,000.

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