Banks Show Big Q3 Gains in All Major Lending Sectors

This week banks are unloading reams of data on loan originations and other third-quarter results — two weeks before the NCUA releases its reports for credit unions.

So far, the largest banks seem to be showing continuing gains for auto loans, mortgages and credit cards with most areas showing gains beyond pre-pandemic levels.

Brian Moynihan, CEO of Bank of America of Charlotte, N.C., said consumers are more willing to spend and borrow, which he said bodes well for the economy.

“The pre-pandemic organic growth machine has kicked back in,” Moynihan said. “Consumers still have a lot of money in their pockets, and they’re going to spend it.”

Mortgage originations in the third quarter were the highest in at least two years for Bank of America of Charlotte, N.C., JPMorgan Chase of New York, U.S. Bank of Minneapolis and Wells Fargo of San Francisco. The combined $134.4 billion in first mortgage originations was up 5% higher than the previous quarter, 8.8% higher than a year earlier and 12% higher than two years ago.

The Mortgage Bankers Association has estimated that third-quarter originations for all U.S. lenders was $915 billion, down 21% from a year earlier and down 13% from the second quarter.

Credit card spending also set a two-year record at $339.4 billion in the third quarter at the four banks. It was 22% higher than two years earlier, 29% higher than 2020’s third quarter and 3.6% higher than the second quarter.

Auto balances at Bank of America, Chase and Wells Fargo were $168.6 billion as of Sept. 30, up 5.9% from a year earlier and 2.4% from June 30.

Credit union auto loan balances estimated by CUNA through August showed more modest growth overall. Car loans were $400.8 billion, up 4.5% from a year earlier and up 1.8% from three months earlier.

At Chase, auto loan production in the third quarter was $11.5 billion, up 0.9% from 2020’s third quarter and down 7.3% from the second quarter. At Wells Fargo, third-quarter auto loan production was $9.2 billion, up 70% from a year earlier and up 10.8% from the second quarter.

Suncoast Credit Union of Tampa, Fla. ($13.8 billion in assets, 967,798 members) was the fifth-largest in auto loans among credit unions in June, holding $4.2 billion in new and used car loans, up 11.4% from a year earlier. It ranked fourth for used car loans with $2.9 billion, up 13.6%, and 10th for new cars with $1.3 billion, up 6.7%.

Michael Hartman, SVP of lending, said Suncoast’s third-quarter auto loan originations rose 15% in value and 5% in vehicle count from a year earlier.

“As with most financial institutions, our members are experiencing a lack of vehicle availability as a result of semi-conductor chip shortages,” Hartman said. “The lack of vehicle availability is escalating prices on available vehicles due to scarcity in the market. This is leading to more members delaying their vehicle purchase until inventory becomes more readily available and prices come down.”

Hartman said he expects growth will continue in the fourth quarter, “however, not at the pace we would typically see in a normal market. We are leveraging promotions along with marketing campaigns to maximize opportunities in serving our members’ auto lending needs.”

The nation’s largest credit union, Navy Federal Credit Union of Vienna, Va. ($147.9 billion in assets, 10.6 million members), is also the largest in both new and used car loans. It held $8.3 billion in new car loans as of June 30, up 19.5% from a year earlier, and $10.8 billion in used car loans, up 18.3%.

“While the auto industry continues to feel the impact of the global chip and parts shortage, Navy Federal has experienced a steady pace month over month in auto loan applications. We’re poised for a strong year of new and used auto purchase originations, as well as refinances,” Joe Pendergast, Navy Federal’s vice president of consumer lending, said.