Total CU capital increases 1.4 percent in March, overall numbers sluggish

Credit union loan balances increased by 0.3 percent in March, an acceleration relative to the 0.1 percent February increase, but the slowest March increase since 2013, according to CUNA’s Monthly Credit Union Estimates for March 2019. March credit union membership growth increased to 0.27 percent from 0.23 percent in February, while year-over-year membership growth was a solid 3.8 percent in March.

The first quarter’s loan growth was 0.7 percent, slow compared to both the 1.9 percent fourth quarter 2018 increase and to the 1.6 percent in the first quarter of 2018.

Auto loan balances increased by 0.3 percent in March, up from 0.1 percent in February. Growth was driven by used auto loans, which increased 0.5 percent (a bit faster than February’s 0.4 percent advance. In contrast, new auto loan balances declined by -0.1 percent in March.

“This is the second month in a row that new auto loans declined; they fell 0.3 percent in February. This is not surprising given that new auto sales were sluggish in the first quarter,” Salem said. “According to the National Automotive Dealers Association (NADA), ‘weather-related events, the federal government shutdown and increasing competition in the used vehicle market contributed to weak first quarter performance of new car sales.'”

The 10-year Treasury declined by more than 30 basis points in March helping to buoy fixed-rate mortgages which were up 0.6 percent in the month. That increase followed a tepid 0.2 percent advance in February. As might be expected, adjustable rate mortgages moved in the opposite direction decreasing -0.3 percent in the month.

“Historically, March is a slow month for credit union credit card loan growth with an average decline of -0.6 percent over the past 18 years,” Salem said. “However, credit card loan growth registered 0.10 percent in March 2018 providing support to the idea that members may have experienced tighter financial conditions this month due to smaller or no tax refunds.”

Home Equity Line of Credit (HELOC) growth dipped into negative territory for the second month in a row. Credit union HELOC balances fell -0.2 percent in March, only slightly better than -0.6 percent decline in February.

“Average interest rates on HELOCs have increased lately, reaching 5.46 percent in March — which translates to an approximate 80 basis point jump from the year-ago average,” Salem said. “Even though home price appreciation has been obvious, higher interest rates are clearly dampening demand for HELOCs.”

Credit union savings balances increased by 1.8 percent in March, marginally slower than the 2.5 percent February increase. Share drafts, regular shares and CDs drove savings growth this month, registering 2.27 percent, 2.08 percent and 2.25 percent growth.

March membership growth increased to 0.27 percent from 0.23 percent in February. Year-over-year membership growth was a solid 3.8 percent in March.