WASHINGTON–The numbers are in for the economic performance of credit unions after two full months of operating under COVID-19 restrictions and they are exactly what most would expect—although lending saw a strong, but likely temporary, increase.
According to CUNA’s newly updated Monthly Credit Union Estimates, analysis of CU performance data through the end of May show the trends the association had earlier reported through April “have generally been continuing, although there are a couple of important differences,” said Mike Schenk, CUNA’s chief advocacy officer for policy analysis and chief economist.
Among those differences, noted Schenk: Loan balance at CUs during May grew at a rate of 1%, an annualized rate of 12%, which Schenk said is the fastest pace seen in two years. But it comes with a caveat, as much of the volume was driven by Paycheck Protection Program loans, although credit unions did see strong volume in first mortgages and used car loans.
Unlikely to be Sustained
“We do expect the recent spikes in COVID cases will affect loan growth moving forward,” said Schenk. “So, I’d be surprised if that is sustained into the future.”
Deposits continued to flow into credit unions during May, but not at quite the same torrid pace as was experienced in April, when savings balances were up 4.7%. During May, CU members increased savings by nearly 3%.
Schenk added that the 15% increase in savings since the beginning of the year is an all-time high in the 30 years CUNA has monitored the data.
Members are keeping their savings short and liquid, with the bulk of deposits in share drafts and shares.
As a result of those trends, the loan-to-share ratio at credit unions declined eight percentage points at the end of May to 76.9%, while the capital-to-asset ratio declined to 10.5%, a decrease of about 80 basis points.