Michigan Credit Unions Grow in Challenging Economy (Monitor: September 20, 2010)
Key mid-year indicators show continued strength
Michigan credit unions continued their growth trend in the second quarter ending June 30, reporting strong net worth, lending and membership growth, despite continuing challenges in the economy. Mid-year statistics from the National Credit Union Administration (NCUA) and the Credit Union National Association (CUNA) highlight the secure financial condition and continued consumer support offered by the state’s credit unions.
“Michigan’s credit unions are a bright spot among financial institutions in the state, despite ongoing difficulties in our economy. They are lending in their communities and supporting businesses and families,” says David Adams, president and CEO of the Michigan Credit Union League & Affiliates. “Our industry is focused on the needs of consumers who, as credit union members, are also owners. At a time when big banks are hard-pressed to make profits, credit unions are growing by offering consumer-friendly alternatives.”
Michigan has the largest proportion of credit union members among the ten most populous states, with 44 percent of residents belonging to a credit union. Since the beginning of this year, nearly 15,000 residents moved their money to their local credit union, bringing total credit union membership in the state to 4,448,600. Nationally, for the same time period, 590,000 Americans joined a credit union, to a total of 91.7 million members.
• NCUA’s second quarter data for Michigan’s credit unions showed improved earnings with stronger than expected return on assets of 0.3 percent despite high loan losses resulting from a challenging economy.
• The net worth to assets ratio, a key measure of financial strength, shows Michigan credit unions at 10.7 percent, higher than the national credit union average (9.9 percent), or for Michigan banks (9.2 percent). The NCUA reports that 94 percent of Michigan credit unions are well-capitalized.
• As Michigan banks continued to freeze credit (12 percent decline) in the second quarter, loans by Michigan credit unions grew (1.2 percent) for the period. Specific areas included used auto loans (up 10.3 percent), first mortgages (up 2.6 percent) and credit cards (up 5.3 percent).
• For the previous 12 months ending June 30, commercial business loans (member business lending) by credit unions showed strong growth, up 17.7 percent, while the national growth rate for credit unions was 7.7 percent. For Michigan banks, commercial lending declined 5.7 percent through June. Nationally, commercial lending by banks declined 13.9 percent during the period.
• Real estate loans by state credit unions grew 0.8 percent during the second quarter. Real estate loans by Michigan banks declined 13.3 percent and 6.8 percent at banks nationally.
• Credit union savings deposits grew by 7.5 percent through the second quarter. In this category, money markets are the fastest growing accounts (up 20.7 percent), as consumers seek the safety and soundness and higher rates offered by credit unions.
Adams notes that credit unions encourage saving and responsible borrowing with programs such as Save to Win, in which members make a $25 deposit for the chance to win monthly cash prizes and a yearly grand prize of $100,000. The program helps people save money instead of spending it on lottery tickets, for example. To date, more than 13,500 Michigan credit union members have saved a total of $12.1 million.
“Credit unions continue to serve the needs of their community and members, who will always need business and auto loans, mortgages and savings options,” says Adams. “Despite chronically high unemployment in Michigan, community-based credit unions continue to contribute to the state’s economic recovery by strengthening their financials and adding new members.”