Total share balances grew $72.3 billion year-over-year as credit unions projected $1.3 trillion in total deposits as of the first quarter of 2019. While deposit inflows are typically larger in the first quarter, the largest first quarter increase on record for the industry occurred in 2019 as total balances were projected to have grown $55.2 billion quarter-over-quarter. Share growth accelerated 31 basis points year-over-year to 5.9% from the rate reported in March 2018.
TOTAL SHARE BALANCES AND ANNUAL GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.19
Callahan & Associates | CreditUnions.com
Total share growth expanded 31 basis points year-over-year as balances neared $1.3 trillion at U.S. cooperatives.
The composition of the share portfolio shifted as a result of liquidity pressures in the industry. Based on first quarter projections, core deposits made up 73.9% of the share portfolio with regular shares and share drafts consisting 53.2% of the overall portfolio. Core deposits, which are considered sticky as they often imply deeper relationships between the credit union and the member, contracted their share of the portfolio 1.8 percentage points year-over-year. While its share of the portfolio declined, core deposit balances still increased 3.3% annually to $953.1 billion as of March 2019.
TOTAL SHARES OUTSTANDING
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.19
Callahan & Associates | CreditUnions.com
Share drafts make up the same proportion of the portfolio as they did a year ago, however, penetration is up 82 basis points year-over-year.
Share draft balances were projected to have expanded 6.1% year-over-year to $208.3 billion in the first quarter of 2019. Though this is a deceleration from year prior, share draft penetration moved up 82 basis points. At 58.1%, the share draft penetration rate is at record levels, which would indicate more members consider credit unions as their primary financial institution than ever before. In the past year, credit unions opened 3.7 million share draft accounts and added 4.8 million members, which is a new share draft account to new member ratio of 77.6%.
What’s Your Strategy For Growing Deposits?
Core deposit balances increased 3.3% annually to $953.1 billion as of March 2019. If you’re looking to grow deposits use Callahan’s Peer-to-Peer to identify leading credit unions and then reach out to learn about what strategies have been working for them. Request a demo to see how easy it is.
Share certificates posted the most impressive growth in the portfolio, with balances up $39.5 billion to $257.4 billion as of March 2019. At 18.1%, annual growth in this product accelerated 11.5 percentage points from the first quarter 2018 rate. The Federal Reserve hiked the federal funds rate four times in 2018, which has driven members turn to interest-bearing accounts for a higher return.
By the end of the first quarter of 2019, IRA/Keough deposits were projected to have grown 1.7% year-over-year which means every share product expanded unlike the previous year. The product has been contracting in recent years, down 1.0% between March 2017 and March 2018. At $79.5 billion as of March 2019, IRA/Keough shares are still $548.3 million below their first quarter high in 2013.
INDIRECT LOAN GROWTH
FOR CAPED FCU | DATA AS OF 12.31.18
Callahan & Associates | CreditUnions.com
Certificate growth expanded 11.5 percentage points year-over-year as members took advantage of rising interest rates.
As liquidity tightens industrywide, strong share growth provides credit unions with the ability to utilize deposits to serve their members. In the current interest rate climate, a growing number of members turned to interest-bearing accounts. The credit union value proposition is resonating as the industry continue to make strides in increasing the ratio of members that use the cooperative for everyday expenses.