Lansing (March 5, 2013) – Consumers continue to turn to credit unions in record numbers for all their financial needs, making 2012 a banner year for the industry. The record-setting results were buoyed by strong demand for auto loans, mortgages, student loans, and business loans, the Michigan Credit Union League said today as it announced year-end results for 2012 in an analysis of data from the National Credit Union Administration.
"More and more Michigan consumers are choosing to truly own their money and experience the credit union difference in the form of superior loan products, better service and lower fees," said MCUL & Affiliates CEO David Adams. "Thanks to prudent management and conservative lending practices, the credit union system emerged from the recession and financial crisis on sound financial footing. We continue to stand ready to help consumers looking for a financial services provider they can trust, one in which they can even lay claim to an ownership stake."
Consumers continued to move to credit unions in impressive numbers in the fourth quarter of 2012 as membership increased by 16,692. For the entire year, Michigan credit unions added 76,829 new members, more than the previous nine years combined.
With new auto sales up 13.4% in 2012 to the highest point since the start of the recession, Michigan credit unions posted an increase in new auto loans for the first time since 2009. According to data from Experian AutoCount, credit unions have now captured 15.5% of the new auto loan market, up 3% from 2011. For used auto loans, credit unions saw an increase on their books of about 8% in 2012, gaining an additional 1.5% of the market share.
“We know that there is tremendous pent-up demand for new cars and we fully expect this growth to continue, which is great news for consumers and for our domestic auto industry,” Adams said. “Through our partnership with General Motors in Invest in America, the nationwide credit union member discount program headquartered here in Michigan, we recently marked a major milestone: the sale of 500,000 vehicles through the program, with the majority of them financed at credit unions.”
Consumers continue to refinance mortgages at a record pace in today’s low-interest rate environment, and they are turning to credit unions for their home loan needs. In 2012, Michigan credit unions financed 65% more first mortgages than in 2011, more than any previous year. This also speaks well to the continued recovery of the housing market, as does the fact that credit union member foreclosures were down 11.8% in 2012. According to RealtyTrac, overall foreclosure activity in Michigan dropped by 23.5% in 2012, a rate of decline which is among the highest in the nation.
“As Michigan rebuilds for a new future, one of the biggest challenges we face is keeping families in their homes while the job market recovers," Adams said. "Michigan credit unions are proud of the role they are playing in helping homeowners succeed and keeping the American dream alive.”
The skyrocketing cost of tuition and ballooning student debt also have more consumers coming to credit unions. Student loans at Michigan credit unions grew by 42% in 2012, with total loans nearing $100 million.
Michigan credit unions continue to support small businesses in their communities with total member business loans up 4.3% for the fourth quarter and up 17% for all of 2012, topping $1 billion for the first time. Nationally, credit union member business loans are up 2.9% on the quarter and 9.2% for the year.
“From college students exploring their career paths to entrepreneurs carrying out their business dreams, they all know they can trust Michigan credit unions to get them where they want to go,” Adams said.
Additional points of interest from MCUL’s data analysis:
• The quality of loans at Michigan credit unions is increasing, as total delinquencies as a percentage of total loans dropped again in the fourth quarter down to 1.08, which is down from 1.49 and 1.79 in 2011 and 2010, respectively. This, in turn, has led to a decrease in loans charged off as a percentage of total loans, down to .77 from .97 in 2011.
• Earnings continue to rise at Michigan credit unions, where the return on assets ratio has increased in each of the past four years now up to .91%. This is higher than the .86% reported by credit unions nationally.
• As a result of solid earnings, credit union net worth increased in 2012 even as assets increased by 5.9%, bringing the total net worth ratio up to 11.08 percent. This is higher than the 10.44 figure for credit unions nationally.