WASHINGTON–If there is one number that pops out from all the other mid-year CU performance numbers just released by NCUA, it’s the “incredible increase in savings growth,” according to one CUNA economist.
As CUToday.info reported here, NCUA’s Quarterly Credit Union Data Summary for Q2 2020, based on Call Report data from 5,164 federally insured credit unions, total assets of credit unions hit $1.75 trillion at the end of the second quarter, with loans up nearly 7% and delinquencies actually down from one year earlier.
But the big trend line is the savings growth, said CUNA Vice President of Research and Policy Analysis Mike Schenk.
“This gave us our first look into the full effects of COVID-19 crisis for April, May and June, and the most important thing I think that stands out is the incredible increase in savings growth in just three months,” said Schenk. “In March, savings were up 8.1% year over year. That increased to 16.5%, largely because of federal stimulus deposits made on the part of members. It’s incredible growth, and translates into 15% increase in credit union assets.”
‘Substantial Pressures’
It has also translated into “substantial pressures” on credit union capital ratios, said Schenk, noting the 11.4% ratio reported by credit unions at year-end 2019 had declined to 10.5% by mid-year 2020.
Schenk said the numbers didn’t come as a big surprise, as CUNA’s monthly survey of approximately 500 credit unions had found those CUs reporting “this was going to happen.”
CUNA’s monthly credit union estimates for July show a “continuation of the fast savings growth, with balances up 1.5 percentage points, according to Schenk.
“That’s not an annualized number, which means savings growth is 18.9% year over year. That’s unprecedented,” he said. “We’ve been tracking this for 30 years and have never seen that. That means additional significant stress on CU balance sheets. The capital ratio finished July at 10.3%. That’s down 110 basis points relative to beginning of year.”
Schenk said when CUNA releases its updated forecast it expects it will be somewhat more upbeat, as labor markets have improved more than anticipated.