May 26, 2015

Credit Union Trends Report: May 2015 (March 2015)



ECONOMIC, COMPETITIVE, AND THE INTEREST RATE ENVIRONMENT

The economy grew at a 0.2% annualized rate in the 1st quarter, below the long-run natural rate of 2.5%, due to falling energy investment, the west coast port strike, adverse winter weather and the rising value of the dollar. The economies underlying growth rate, however, is currently running at 3.0%, and should accelerate to 3.3% in 2016, above the 2.4% pace set in 2014. Nevertheless, the economy is still operating 2% below its potential, referred to as the “output gap,” but the economy is rapidly approaching its potential level of output. The Federal Reserve will therefore begin increasing interest rates later in 2015.

During March, the economy added 85,000 jobs, the unemployment rate remained at 5.5%, personal income stagnated with zero growth, consumer prices climbed 0.2%, consumer confidence rose, new home sales fell 11.4%, existing home sales rose 6.1%, home prices rose 2%, and the 10-year Treasury interest rate increased 6 basis points to average 2.04%.

Credit Union Trends Report Highlight Video:


Report Highlights:



  • During March, credit unions picked up 496,000 new memberships, credit union loan balances grew at an annualized 11% pace, bonuses and tax refunds boosted deposit balances 0.4%, firms hired 85,000 workers, the existing home market picked up steam, long-term interest rates rose, and the Federal Reserve did not waver from their belief that economic growth will accelerate.
  • At the end of February, CUNA’s monthly estimates reported 6,424 CUs in operation, down 13 CUs from one month earlier. Year-to-date the number of credit unions declined by 89, greater than the 60 lost in the first three months of 2014.
  • Credit union savings balances rose over the one trillion dollar mark in March, the first time in credit union history. March is historically the second strongest month for savings growth due to tax refunds and bonuses. Expect savings balances to fall below one trillion dollars in April as members pay their tax bills.
  • The nation’s CUs increased their loan portfolios 0.6% in March, slightly less than the 0.65% pace reported in March 2014. During the last 12 months, credit union loan portfolios increased 10.6%, the fastest pace since December 2005, which illustrates the roughly decade long credit cycle.
  • Credit union memberships rose a robust 496,000 in March, or 0.5% month-over-month, up from 380,000 reported in March 2014, or 0.4%, to reach 102.8 million. The underlying annualized membership growth rate is now 4.0%, the highest since March 1997.
  • Credit union loan delinquency rates fell to 0.74% in March, down from 0.81% one year earlier. This is the lowest delinquency rate since August 2007, the date economists use to mark the beginning of the mortgage crisis.
Download the full Trends Report