February 18, 2015

Credit Union Trends Report: February 2015 (December 2014 data)

ECONOMIC, COMPETITIVE, AND INTEREST RATE ENVIRONMENT

The economy grew 2.6% in the fourth quarter of 2014, above its underlying potential growth rate of 2.0-2.5%. This will use up some of the economy’s excess capacity and close the gap between actual output and potential output. Inflation, however, plunged in December falling 0.4% due to falling energy prices and the strengthening dollar. Low inflation won’t stop the Federal Reserve from beginning the process of normalizing interest rate in the second half of 2015.

The unemployment rate fell to 5.6% in December as the economy added a remarkable 329,000 jobs. Wage growth will begin to accelerate over the next few months as the labor market approaches full employment. Lenders loosened their lending standards for consumer and mortgage loans in the fourth quarter, according to the Federal Reserve’s Loan Officer Survey.


Credit Union Trends Report Highlight Video:



Report Highlights:

  • During December, credit union members slowed their pace of debt accumulation and saved most of their gasoline price dividend, credit unions reduced their excess liquidity by making loans and repaying borrowings, and the economic recovery became a self-sustaining economic expansion.
  • At the end of December, CUNA’s monthly estimates reported 6,535 CUs in operation, down 11 CUs from one month earlier. The number of credit unions declined by 260 in 2014, fewer than the 275 reported in 2013.
  • Credit union savings balances rose 0.2% in December, above the 0.3% decline reported in December 2013, as members pocketed some of the savings at the gas pump. Credit union savings balances rose 4.8% in 2014, faster than the 3.6% pace reported in 2013. Asset growth of 5.2% in 2014 outpaced savings growth as credit unions turned to borrowings to fund some of their assets.
  • The nation’s CUs increased their loan portfolios 0.7% in December, a slight deceleration relative to the 0.8% pace reported in December 2013. Loan balances rose 10.2% during 2014, the fastest pace since 2005.
  • Credit union memberships rose a remarkable 464,000 in December to reach 101.9 million, a 0.5% increase from November. Memberships rose 3.6% during 2014, the fastest pace since 1988.
  • Credit union loan delinquency rates fell to 0.82% in December, down from 1.00% set in December 2013, and less than half the 1.88% reported in February 2010 in the aftermath of the Great Recession. Credit union loan-to share ratios reached a new cyclical high in December, breaching 74.7% above the 71% reported in 2013.