Magazine article American Banker

Loans Grew Faster Than Deposits in 9 Months, Reversing a Trend

Magazine article American Banker

Loans Grew Faster Than Deposits in 9 Months, Reversing a Trend

Article excerpt

For the first time since 1989, growth rates for credit unions' loan portfolios seem to be higher than for their deposits, according to figures released recently.

The findings, compiled by Callahan & Associates, a Washington consulting firm, are based on quarterly reports to the National Credit Union Administration by 1,056 credit unions with more than $50 million of assets. On Sept. 30 they were managing $185 billion of assets in all, 65% of the total for the nation's 12,912 credit unions.

In the first nine months of 1993, Callahan calculated, the loan portfolios of the 1.056 credit unions' increased 6.5%, to $100.3 billion, while deposits rose only 4.3%, to $164.5 billion.

The pattern contrasts with that of the first nine months of 1992, when the loan portfolios grew only 2.4% while deposits shot up by 9.5%.

In this year's third quarter alone, the loan portfolios rose 2.8% above the June 30 level as deposits increased only 1%.

Regulators Hopeful

Officials of the National Credit Union Administration are cheered by the showing but say it's too early to tell whether the longtime trend of sluggish loan growth has ended.

"These are the best numbers we've seen in five years," said D. Michael Riley, director of examination and insurance for the agency. "But it's a little early to say anything gigantic is happening."

"You can't see a great deal in nine-month data," said Timothy P. McCollum, deputy director of the NCUA's Region 3, in the Southeast. "But it seems loans have hit bottom and are coming back up."

Annualized return on assets for the 1,056 institutions stood at 1.6% for the nine months, Callahan calculated, compared with 1.5% in the year-earlier period. Net income for the nine months stood at $2 billion - about 83% of full-year 1992 earnings.

Dramatic Decline

Investments grew only 3. …

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