BANKING INSIDER: Credit union numbers dip, but other factors grow

Despite the decline in the number of credit unions, the industry is profitable and growing as membership, total lending, capital growth and savings deposits were all higher, according to the latest monthly industry survey.

CUNA Mutual Group’s November Credit Union Trends Report, which tracked data through September, shows good news continues on the lending front as the 6.7 percent annual gain translates into an additional $41 billion on the books.

“Looking at factors impacting future loan growth, we see stronger member demand and greatly reduced financing subsidies from manufacturers as positives, but the end of the mortgage refinance boom, re-emerging credit card competition and loan sales due to interest rate risk management restraining growth potential,” said Dave Colby, CUNA Mutual’s chief economist.

Colby said the group’s forecast shows annual loan growth of 6.2 percent this year and annual gains averaging 6.5 percent through 2015.

Year over year, the combination of vehicle loans and first mortgages supplied 96 percent of all loan growth. Member business loans, also known as MBL, were up 0.9 percent year over year after averaging 9.3 percent during the past three calendar years.

Colby said he’ll wait for third-quarter data revisions before commenting on MBL trends.

In terms of vehicle loans, Colby said he is “running out of superlatives.” Annual growth in vehicle loans was 11 percent, while the business represents 30.7 percent of all credit union loans, up from a low of 28.7 percent at the end of 2011.

During the past year, vehicle loan portfolio expansion of $19.7 billion accounted for 48 percent of all credit union loan growth, according to the eight-page report.

New-vehicle loans accounted for 18 percent of all loan growth year to date and year over year, according to the report. The national average new-vehicle loan rate is 3.19 percent, while a used-vehicle loan averaged 3.95 percent.

Meanwhile, credit unions nationwide added 1.5 million members in the third quarter bringing the year-to-date gain up to a record 2.8 million. As of Sept. 30, there were 98.7 million credit union members nationwide.

“Expect a slight pullback by year-end as fourth-quarter numbers are usually weak,” Colby wrote. “Despite record membership increases, loans-per-member of $6,570 is up 3.8 percent since September 2012, the strongest growth in this key measure since mid-2009.”

Colby said further improvements in this measure will have a positive effect on member household finances as well as credit unions’ bottom lines.

The credit union market finished September with an estimated 6,865 institutions, a decline of 205 year to date and 279 during the past year. The average size of the merged credit union remains under $20 million, the monthly report said.

SNL Financial, the financial and consulting firm in Charlottesville, Va., recently released a report showing banks nationwide shut 390 branches in the third quarter, continuing a trend of consolidation for most financial institutions.

According to the firm’s data, banks have closed 1,343 branches since the fourth quarter of 2012, as increasingly more routine business — transfers and deposits — can be done online or with a smartphone application.

Forty-five states, and American territories Guam and Puerto Rico have lost bank branches from Oct. 1, 2012, to Sept. 30. Hawaii did not gain or lose any branches and Alaska was not mentioned in the five-page report.

Nebraska at seven and Montana with two were the only two states to gain branches, according to the report.

The states that lost the most branches were Pennsylvania (106), Georgia (81), Florida (79), and Indiana (77). Nevada has lost eight branches.

SunTrust Banks Inc. and Bank of America Corp. led all others in terms of net closings in the third quarter. SunTrust shuttered 31 branches bringing its total to 1,551, while Bank of America closed 26, leaving 5,339.

JP Morgan Chase &Co. with seven new branches topped the list of openings in the third quarter. Chase has 5,711 branches.

In total, 179 branches opened during the third quarter, far below the 323 openings in the second quarter. The third-quarter branch openings also fell shy of the 569 closings in the quarter.

The Small Business Administration has launched a program to get more small-business loans into the hands of veterans.

The agency said it will set the borrower upfront fee to zero for all veteran loans authorized under SBA Express up to $350,000. The initiative begins Jan. 1 and will continue through the end of the fiscal year.

Of all SBA loans that go to veterans, 73 percent are $350,000 or less, the SBA said. The agency’s Express Loan Program is the SBA’s most popular loan delivery method, with nearly 60 percent of all 7(a) loans over the past decade being authorized through the program, according to the SBA.

“Our nation’s veterans are highly skilled and highly trained leaders in their communities,” acting SBA Administrator Jeanne Hulit said. “As we honor our veterans and thank them for their service and sacrifice, let’s continue to identify ways to support them when they come home.”

Hulit said the program was part of the agency’s broader efforts to make sure veterans have the tools they need to start and grow a business. In fiscal year 2013, the SBA supported $1.86 billion in loans for 3.094 veteran-owned small businesses.

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