WASHINGTON–The surge in member savings that has helped to drive down the overall credit union industry capital ratio cooled off in August. Loan volume also slowed.
According to CUNA Vice President of Research and Policy Analysis Mike Schenk, the “most impactful development” to be seen in August data is that “savings growth has decelerated significantly.”
Schenk said CUNA’s Monthly Credit Union Estimates show savings grew just .03% during August, the slowest pace in 2020. That followed an inflow of savings in July during which member savings balances were up 1.6% for the month.
“It’s a really strong slowdown that is a big deal in the overall scheme of things,” said Schenk.
Schenk noted that in June of 2019 the overall credit union capital ratio had been 11.4%, a number that had declined to 10.5% as member borrowing slowed and savings increased, primarily as a result of federal government stimulus payments to households.
“Now what we are seeing is nearly break even savings growth, and the capital ratio has stopped its precipitous slide and settled in around 10.5%,” he said. “Ideally, that will continue.”
On the other side of the balance sheet, Schenk said the CUNA data indicate loans also decelerated in August, growing just 2.2%. Volume was up in mortgages, used vehicles and commercial loans, but all other loan categories were down.