Skip to main content

Credit Union Lending Picks Up in Most Areas

Credit unions were increasing their portfolios in most areas in June, except business lending and new car loans, where portfolios fell for the 24th month in a row after seasonal adjustments, according to a CUNA Mutual Group report released Tuesday.

The Madison, Wis., trade group’s Credit Union Trends Report showed new auto loan balances were $141 billion on June 30, falling at a 3.3% seasonally adjusted, annualized rate from May to June, part of the May-through-October peak car-buying season.

Credit unions held $252.4 billion in used car loans on June 30, up 1.2% from May without seasonal adjustments.

The Trends Report made slight adjustments to CUNA’s Monthly Credit Union Estimates released earlier in the month. In this case, its changes allowed total auto loan balances to show a slight 0.3% un-adjusted May-to-June gain, compared to being flat in the CUNA report.

Steve Rick, chief economist for CUNA Mutual Group and the report’s author, said gains were stronger in other areas, including credit cards and home loans.

Credit union loan balances grew at a 5.9% seasonally adjusted, annualized rate in June, which Rick said is better than the 4.9% pace set in June 2020 “during the worst of the economic crisis,” but still below the 7% long-term average. Over the long run, credit union loan balances have risen on average 7% per annum.
“Credit union loan growth is finally on the upswing as the economy reopens and vaccination rates improve,” Rick said. “We are forecasting above trend credit union loan growth for the next two years (around 8%) as the economy resumes its normal growth, pent up demand is satiated and infrastructure spending kicks in.”

That’s a slight change from the last CUNA-CUNA Mutual Group forecast in June that forecast 5% annual growth in loan balances for 2021 and a 9% gain in 2022.

The Trends Report showed credit card balances rose at a 2.2% seasonally adjusted annualized rate from May to June, which Rick said was the first seasonally adjusted gain since October 2019.

“Rising gas prices, consumers venturing out again and spending on services will keep credit card loan growth in the positive territory for the remainder of the year,” he said.

Mortgages have continued to be the strongest area of growth. Credit unions held $547.9 billion in first mortgages on June 30, up 1.9% from June and up 8.9% from a year earlier, without seasonal adjustments.

Credit unions had 4.8% of the nation’s first mortgages in their portfolios as of June 30, up from 4.7% as of March 31 and 4.6% as of June 2020. Strategy is a major driver of those shares, which are based on totals from the Mortgage Bankers Association. While credit unions have been selling more of their mortgages in the past year, they still tend to hold a higher percentage in their portfolios than other lenders.

Measured by origination's, credit unions have been losing share. Data from Callahan & Associates and the Mortgage Bankers Association showed that credit unions originated $80.9 billion in first mortgages in the second quarter, or 7.7% of the $1.05 trillion in origination's by all lenders.

Rick said credit union loan quality continues to improve, with low charge-offs and a 60-day delinquency rate of 0.44% as of June 30, well below the 0.75% that has been considered the “natural” delinquency rate.

“The improving labor market is a major factor pushing the credit union loan delinquency rate to the lowest level in more than 25 years,” Rick said. “Also contributing to the very low loan delinquency rates were credit union low forbearance programs, lower interest rates that helped consumers lower their debt servicing costs, enhanced unemployment benefits and stimulus checks.

“And finally, most job losses occurred in the service sector among low income jobs,” he said. “Since low income workers typically can’t obtain a large amount of debt, and if they did run into financial difficulty, they didn’t have a large amount of debt to become delinquent.”

Rick also predicted the number of credit unions would fall by 189 this year, up from the 143 lost in 2020. CUNA estimated 5,530 credit unions were in operation as of June, three fewer than in May and 154 fewer than in June 2020.

The gulf between large and small credit unions was reflected in their asset averages and medians. The average asset size of a credit union was $381.2 million in June, up “a remarkable 22% from a year ago,” Rick said. Meanwhile, half of credit unions held less than $46.5 million in assets in June, a median that is 24% higher than a year earlier.

“The trend toward industry consolidation and bigger credit unions is only likely to accelerate due to the benefits of greater economies of scale, higher productivity and larger earnings that are all achieved with a larger asset base,” Rick said. “Larger, more efficient credit unions will also raise the barrier to entry for new, small credit unions.”


Jim DuPlessis CUTimes

 

Comments

Popular posts from this blog

Digital Payments Lead the Way Globally: Key Insights from Worldpay Study

According to a recent Worldpay study, digital payments are rapidly becoming the preferred choice worldwide. The research highlights significant shifts in consumer behavior and payment preferences, driven by technological advancements and the growing acceptance of cashless transactions. Key findings from the study reveal that digital payments now account for a substantial portion of global transactions. Mobile wallets, contactless payments, and online banking are gaining traction, reflecting consumers' desire for convenience and speed. This trend is especially prominent in regions like Asia Pacific, where mobile payment adoption is leading the charge. The study also emphasizes the importance of security in fostering consumer trust in digital payments. As fraud concerns continue to rise, businesses must prioritize robust security measures to protect customer information and enhance the payment experience. Moreover, the transition to digital payments is not just about c...

NCOFCU - "Video Mini's" The Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. Established in 1913 by the Federal Reserve Act, the Federal Reserve serves several crucial functions in the U.S. economy. Here are the main aspects of the Federal Reserve:  Visit NCOFCU's YouTube channel for more. "Video Mini's" The NCOFCU "Video Minis" are a series of concise 2-3 minute video presentations designed to deliver valuable insights and knowledge on key topics relevant to credit unions. Each video focuses on a specific subject, providing viewers with essential information in a brief and engaging format. These mini-presentations cover a range of subjects. Perfect for busy professionals seeking quick yet impactful content, the Video Minis make it easy to stay informed and enhance your credit union's operations and member services. Join us in exploring these informative and dynamic learning opportunities!

Fixed-Rate 30-Year Mortgage Decreases

MCLEAN, Va.--The 30-year fixed-rate mortgage averaged 6.65% this week, a slight decrease from last week's 6.6, Freddie mac reported. “The 30-year fixed-rate mortgage ticked down by two basis points this week,” said Sam Khater, Freddie Mac’s chief economist. “Recent mortgage rate stability continues to benefit potential buyers this spring, as reflected in the uptick in purchase applications.” Freddie Mac noted: The  30-year FRM  averaged 6.65% as of March 27, 2025, down from last week when it averaged 6.67%. A year ago at this time, the 30-year FRM averaged 6.79%. The  15-year FRM  averaged 5.89%, up from last week when it averaged 5.83%. A year ago at this time, the 15-year FRM averaged 6.11%.

The Role of the Board Chair

Tim Harrington, CPA   CEO, TEAM Resources The Role of the Board Chair Recently I had the chance to spend some time with a great group of board members . One of the things we talked about was the role of the board chair. I thought this well worth putting down on *paper* as it were. The role of the chairperson is multi-faceted, complex, and often changing within the context of the organization’s dynamic. Unfortunately, there’s no perfect set of “rules.” But there are some guidelines. Here are our “tips” on navigating the position successfully: Roles Facilitator  – The board chair must draw together the individual directors into a team, working together on behalf of the membership and the credit union. To do that, s/he must wrangle individual personalities, draw out conversation from some, and rein it in from others. Having a solid understanding of the personalities of each director … and the CEO helps the chair keep things on track, moving forward, and civil. ...

President Trump is leading the way toward reduced check usage by phasing out paper checks for government payments.

WASHINGTON—A new  executive order  from President Donald Trump bans paper checks as a form of payment for the federal government. The order was signed noting that Treasury checks are often reported stolen, and face other issues. The order also notes that payments made  to  the federal government are also modernizing. “Check fraud is a perennial concern for the banking industry, growing in recent years – reports doubled from 2021 to 2022. Target stores announced last year that they would stop accepting paper checks,” the Independent Community Bankers of America pointed out. “It's a great sign that the government is leading the way toward reduced check usage by phasing out paper checks for government payments,” said ICBA payments expert Scott Anchin, noting that consumers and financial institutions should maintain the ability to determine appropriate payment mechanisms for specific cases.  ABA President and CEO Rob Nichols said his organization welcomes President ...