Echoing words from a month ago, CUNA Mutual Chief Economist, Dave Colby, reports the economic rollercoaster continues its wild ride, mostly downhill. “This is not good history to repeat,” Colby says.

Should anyone doubt the seriousness of the situation, Colby points out that the October unemployment report, initial third-quarter gross domestic product (GDP) numbers, and equity market performance confirm we are in a recession. “The only questions remaining are, how long and how deep will we go before turning positive,” he says.

“Recent readings of both consumer sentiment and confidence do not bode well for a consumer-led recovery,” advises Colby in the November 2008 Credit Union Trends Report  (452 KB/8 pages). “Rather, they indicate further retrenchment and very cautious spending intentions.”

The monthly report, published by CUNA Mutual using data compiled through September 2008, also notes that additional stimulus and “bailout” dollars are expected, and that the incoming administration faces an enormous challenge.

Other report highlights for credit unions:

• Total loans increased 6.2% year-to-date through September and 7.8% over the past year. Real estate-secured loans supplied more than 88% of the annual gain and 86% of the YTD increase. “Given the current environment, we have concerns regarding both the sustainability and advisability of this growth dependence,” warns Colby.
• Vehicle lending subtracted from growth over the past year, but remains fractionally positive YTD.
• Member business loans are growing at an 18.9% annual pace and contributed 12% of the total loan increase. MBLs now represent 5.5% of loans, up 50 basis points over the past year.
• The loan-to-share ratio (84.3%) stands at a 28-year high. The capital-to-asset ratio held steady at a healthy 11.0%. “Expect both to decline in the near term,” Colby says.
• Credit quality eroded slightly with delinquencies now equal to 1.103% of all loans.
• At $821 billion, total assets are up 7.8% from a year ago. “Credit unions did not experience a surge of deposits from the equity market meltdown in September, and only time will tell if October’s equity declines drove funds into CUs,” Colby says.
• There were an estimated 8,210 credit unions at the end of September 2008, a net loss of 266 over the past year and 186 YTD. “Consolidation remains well below historical trends,” Colby notes.
• Total credit union membership climbed to an estimated 91.9 million in September, “reflecting an unrealistic YTD gain of 2.6 million,” says Colby, predicting downward data adjustments in the fourth quarter.

“I firmly believe credit unions and the credit union system can benefit greatly by helping members most impacted by this economic cycle and credit crisis,” says Colby. “Fairly priced access to credit, when it is needed the most, can be the big credit union difference.”

View the three most recent monthly Credit Union Trends Reports.