Even with recent declines in energy prices and improvements in equity markets, the latest credit union operating results and other factors make it clear that the current economic cycle has not bottomed out, according to CUNA Mutual Chief Economist Dave Colby.

“Recent employment data and new vehicle sales figures are quite sobering,” Colby reports in the August 2008 Credit Union Trends Report  (420 KB/8 pages) newsletter. “The housing correction and credit crisis will be with us through at least year-end, if not longer.”

The monthly report, published by CUNA Mutual using data compiled through June 2008, reports that total loans reached $566 billion for credit unions at midyear, thanks to a 1.3% month-only gain in June. Through the first half of 2008, total loans climbed 4.1%, compared to a 2.4% increase for the same period in 2007.

“The outlook for lending on new consumer purchases continues to look weak,” Colby cautions. “Credit unions need to aggressively pursue members with existing debt who will benefit from more favorable terms at their credit union.”

Other report highlights for credit unions:

• Total loans have increased 8.3% from a year ago. 
• Year-to-date, real estate-secured loans account for 103% of the total increase with 89% attributable to first mortgages. Vehicle loans, led by a 4.7% year-to-date drop in new vehicle loans, have declined for the year and are 0.2% below June 2007 levels. "Uncertainty regarding employment and gas prices is causing consumers to defer new vehicle purchases,” says Colby.
• The loan-to-share ratio rose to 81.8% and the capital-to-asset ratio inched higher to 11.0% although capital growth continues to slow.
• The delinquency rate moved fractionally higher to 1.06%.
• At $825 billion, total assets are up 8.0% over the past year. “Both savings and asset growth remain strong,” notes Colby.
• There were 8,243 credit unions at the end of June 2008, a net loss of 153 during the first half of the year and 295 over the past year.
• Total credit union membership was estimated at 91 million in June, a gain of 1.6 million in 2008.

“Some believe we are more than halfway through the downturn, but if that is true, we are probably at 51%,” says Colby. “Don’t expect to see consistent signs of recovery until the end of the first quarter 2009.”

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