Among credit union officers interviewed, expectations for this year’s loan volume ranged from no growth to single-digit growth.
“We anticipate trends remaining consistent in 2021 without significant changes until jobs and the economy begin to get back on track, unless the economy shows a strong rebound to pre-pandemic levels,” Mark Coburn, SVP for lending development at State Employees’ Credit Union of Raleigh, N.C., said.
A CU Times analysis of NCUA data released in late January showed that the 15 credit unions held $27.7 billion in new car loans as of Dec. 31, up 1.3% from a year earlier, while used car loans rose 12.4% to $39.3 billion. Non-auto loans were $165.8 billion, up 4.9%.
Credit unions contacted for this story included four among the top 15 and two others in the top 100. They were:
- Alaska USA Federal Credit Union, Anchorage ($9.8 billion in assets, 696,926 members) ranked No. 3 in total auto loans as of Dec. 31 with $4.5 billion, up 2.1% from a year earlier. New car loans were $2.1 billion, down 0.9%, while used car loans were $2.5 billion, up 4.7%. Non-auto loans were $2.3 billion, up 9.9%.
- Pentagon Federal Credit Union, Tysons, Va. ($26.7 billion in assets, 2.2 million members) ranked No. 9 in total auto loans as of Dec. 31 with $3.6 billion, up 2% from a year earlier. New car loans were $1.7 billion, down 8.6%, while used car loans were $1.9 billion, up 14.4%. Non-auto loans were $15.4 billion, down 6.6%.
- Suncoast Credit Union, Tampa, Fla. ($12.3 billion in assets, 922,142 members) ranked No. 6 in total auto loans as of Dec. 31 with $3.9 billion, up 6.3% from a year earlier. New car loans were $1.2 billion, up 0.8%, while used car loans were $2.7 billion, up 9%. Non-auto loans were $5.4 billion, up 17.4%.
- State Employees’ Credit Union, Raleigh, N.C. ($47.4 billion in assets, 2.5 million members) ranked No. 11 in total auto loans as of Dec. 31 with $2.9 billion, up 0.3% from a year earlier. New car loans were $805.4 million, down 4.8%, while used car loans were $2.1 billion, up 2.4%. Non-auto loans were $21.7 billion, up 0.7%.
- Teachers Federal Credit Union, Smithtown, N.Y. ($8.4 billion in assets, 355,731 members) had total auto loans at Dec. 31 of $745.5 million, down 10.4% from a year earlier. New car loans were $336.7 million, down 20.2%, while used car loans were $408.8 million, down 0.3%. Non-auto loans were $4.4 billion, up 7.5%.
- Pennsylvania State Employees Credit Union, Harrisburg, Pa. ($7.5 billion in assets, 481,077 members) had total auto loans at Dec. 31 of $1.9 billion, up 2.1% from a year earlier. New car loans were $602.6 million, up 0.8%, while used car loans were $1.3 billion, up 2.8%. Non-auto loans were $3 billion, up 10.2%.
Bill Zysk, chief credit officer for Pennsylvania State Employees Credit Union, said he expects new car unit originations to rise about 10%, on par with the national forecast. He said he hopes its total car loan portfolio will rise 5% to 10% this year, after rising 2% in 2020.
“It’s going to be a function of how we open up, if people have the leisure to be going out again,” Zysk said. “I was at a dealer today. We were all masked up. It’s not a lot of fun.”
Alaska USA Federal Credit Union has 22 branches in Alaska, but it is expanding in the Lower 48. It has 15 branches in Washington, 12 in Arizona, seven in California and members across the country. It is now the third-largest credit union auto lender.
Patrick Cosgrove, chief lending officer for Alaska USA, said loans took a dip in the spring and then rebounded, “ending up a very good year.” Overall originations rose 4% to $2 billion in 2020.
“You’ll see us look at areas where we think there might be a good fit and there might be a need from a membership standpoint,” Cosgrove said. “We’re open to looking at various routes for potential growth, whether it’s organic growth or a potential acquisition or merger opportunity. It’s going to be a holistic vision of growth moving forward, not just focusing on one area.”
Among the Top 15, results were mixed with three showing declines in total auto portfolios and four with growth that rounded to zero.
Among the eight with gains, two stood out with growth rates above 20%:
- SchoolsFirst Federal Credit Union, Santa Ana, Calif. ($23.7 billion in assets, 1.1 million members) had the fastest annual growth as total auto loans rose 25.5% to end the year at $3.8 billion.
- Navy Federal Credit Union, Vienna, Va. ($135.7 billion in assets, 9.9 million members), which always floats to the top in rankings of size, had the second-largest percentage gain with its total automotive loans growing 21.2% to $17.8 billion.
The trends for the top 15 were similar to those estimated by CUNA for the 12 months ending Nov. 30 with total car loans rising 1.3% to $385 billion. It estimated new auto loans fell 3.9% to $143.8 billion, while used auto loans rose 4.6% to $241.2 billion.
NCUA numbers give members and the rest of the public only a limited view of auto lending trends because its Call Reports only show portfolio balances, not originations. Generally the portfolio changes are a watered-down part of the origination trend.
For example, North Carolina’s SECU’s auto portfolio was essentially unchanged in the 12 months ending Dec. 31, but the volume of dollars originated last year fell slightly.
SECU reported some recovery in the second half of 2020 after the sharp drop in originations in the spring, but it wasn’t enough to prevent an overall 1.4% drop for the year.
“The pandemic had the most profound impact on our originations,” Coburn said. “Between a large percentage of the workforce transitioning to work from home and the increase in the number of unemployed consumers, the need for new vehicles decreased substantially.”
Auto loan sales can also mask origination trends. NCUA data showed PenFed’s auto portfolio value rose 2% last year, but President/CEO James Schenck said it funded $1.8 billion in auto loans over the 12 months, up 9% from 2019, despite the huge drop in auto loans last spring. The growth was sold away in participations.
“It was a strategic decision that we were going to let student refinance, unsecured loans and credit card balances be greater mix on the total balance sheet. We basically kept auto lending on the balance sheet flat,” Schenck said.
New car sales took a much bigger hit last year, a trend that generally favored credit unions, which rely much more heavily on used car loans.
Among the top 15 auto lenders, auto loans accounted for 28% of total loans as of Dec. 31, evenly split between new and used.
Among all credit unions, CUNA estimated that autos accounted for nearly a third of the total value of credit union loans as of Nov. 30, with 12% for new cars and 20% for used.
SECU benefitted from its heavy reliance on used car lending. The credit union’s rates have been the same for all members, regardless of credit score, and it has tended to lend more heavily than most credit unions among those whose credit scores are less than prime.