ALEXANDRIA, Va.-America's federally-insured credit unions showed strong asset and savings growth between January and June 2002, according to the mid-year 5300 Call Reports. The data also highlighted the shrinking number of credit unions but growth in assets. Savings at credit unions increased 7.68% in the first six months of 2002, from $437.1 to $470.7 billion, NCUA's data showed. Credit union assets increased 7.45%, from $501.5 to $538.9 billion and loans rose 3.47%, up from 2.79% growth in the first half of 2001. They jumped in value from $322.4 to $333.6 billion. Meanwhile, the amount and number of delinquent credit card loans and loan delinquencies recorded dropped. Credit union membership growth held steady through the first half of 2002 as credit unions reported more than 80 million members as of June 30, 2002, up from 79,379,158 at year-end 2001. At the same time, the number of credit unions dropped by 170, from 9,984 at the end of last year to 9,814, primarily due to mergers, according to NCUA. "Based on a fairly uncertain time.things are holding up really well," NAFCU Economist Jeff Taylor observed. He commented that the low-interest rate environment has really helped the financial services sector, particularly in the areas of refinancing and first mortgages. Taylor applauded credit unions' handling of the excess funds rolling in mostly due to the roller coaster ride the stock market has taken. With double-digit savings growth expected again this year, credit unions have still managed to keep their net worth ratios high. While the average ratio for all federally-insured credit unions dropped from 10.84% to 10.58% between year-end 2001 and the end of June 2002, Taylor emphasized that it still remains well above Prompt Corrective Action (PCA) requirements and really does not amount to much difference considering the massive influx of funds. He added that NAFCU members have shown increased concern over the PCA requirements and greater interest in secondary capital usage. NCUA is currently mulling over a proposal for a "safe harbor" for credit unions marginally under the minimum net worth requirements due to strong growth. Taylor expects that savings growth will increase in the third quarter as a result of the unruly stock market so far this quarter, possibly reaching about 9%, but he said it should slip in the fourth quarter due to holiday spending. He also pointed out that regular shares grew 12.9%, while money market shares jumped 15.3%, indicating potentially short-term deposits. Taylor expects between 11% and 12% savings growth by year-end. He predicted it could be well into 2003 before a return to the typical 5% to 6% range for savings growth. The economist also touted credit unions' ability to pool their individual resources. While gross income decreased 2.70% in the first two quarters of 2002, as opposed to being up 6.34% in the first half of 2001, net income jumped from 2.26% growth between January 1 and June 30, 2001, to 21.76% growth for the same period in 2002. Taylor stressed that credit unions achieved this by increasing return on assets (from 0.94% in the first half of 2001 to 1.04% for the first six months of 2002) and reining in the cost of funds (from 3.36% for the first six months of 2001 to 2.40% in the first half of 2002). [email protected]