Credit Unions Beat Expectations in 2021

As results trickle in for the final months of 2021, the movement of credit unions appears to have been better than expected.

Those trends became clearer this week with reports released from CUNA, the Fed’s G-19 Consumer Credit Report and the N.Y. Fed’s quarterly report on household debt.

CUNA’s Credit Union Monthly Estimates showed total loans grew 7.5% to $1.28 trillion in the 12 months ending Dec. 31, slightly better than the 7% growth for 2021 in its Jan. 22 forecast.

Mortgages, which account for about half the balance sheet, have been spryer in their post-boom dotage than expected by Mortgage Bankers Association forecasts.

Credit union auto loans, which account for about a third of loans, haven’t kept up with other lenders in balance sheet growth, but balances are picking up speed.

And credit card balances, which account for 5% of loans, finally exceeded their pre-pandemic level in December — just by a hair, but they stand better than banks, which ended the year still a hair below their balances in February 2020.

While mortgage originations generally have been lower than the peak levels of 2020, they were better than expected for the Top 10 credit unions, which account for 18% of credit union assets.

A CU Times analysis, reported Feb. 2, found the Top 10 generated $68.7 billion in first mortgages in the three months ending Dec. 31, up 32% from 2020’s fourth quarter. By comparison, the N.Y. Fed’s household debt report released Tuesday showed fourth-quarter mortgage originations fell 12%.

Credit union auto lending didn’t compare as favorably with other lenders, but the trend is improving. Comparing unadjusted data from the Fed’s G-19 Consumer Credit Report released Monday with CUNA’s monthly estimates, credit unions held 31.1% of the nation’s motor vehicle loans as of Dec. 31, unchanged from Sept. 30 but down from 31.5% in December 2020, 32.2% in December 2019 and a high of 32.6% in December 2018.

CUNA showed that credit unions held $408.2 billion in auto loans Dec. 31, up 5.9% from a year earlier, while the Fed showed that auto loans grew 7.7% to $903.4 billion among other lenders.

New car loans at credit unions fell 1.4% to $142.5 billion in December, while used car loans grew 10.2% to $265.7 billion.

First-lien mortgage balances at credit unions grew 11.9% to $586.7 billion over the 12 months ending Dec. 31, and grew 8.8% to $10.93 trillion among all lenders.

More remarkable were the gains from the previous quarter.

For credit unions, first mortgages increased 4.6% from September to December — the highest three-month gain since a 3.6% gain from March to June 2020, when the refinance boom was taking off despite the pandemic.

Spring is also typically the period of highest mortgage growth. From 2013 through 2019, the median September to December gain for first mortgages was 2.1% at credit unions.

The 2.4% three-month gain for all lenders measured by the N.Y. Fed was the highest since a 2.5% gain from June to September 2007 — just before the Great Recession.

The quarterly gains were also unusually high for both in the second and third quarters for both credit unions and other lenders.

As of Jan. 21, the Mortgage Bankers Association had estimated fourth-quarter first mortgage balances ended the year at $11.55 trillion, up 5.8% from a year earlier and up 1.5% from September. The MBA watches the Fed numbers, and its next chance to revise its monthly forecast released mid-month.

And, at long last, credit cards rose above their pre-pandemic levels for credit unions. Balances ended the year at $65.7 billion, up 5.5% from 12 months earlier and up 0.7% from February 2020. At banks, balances rose 7.3% to $939.4 billion, but were still a scant 0.7% lower than in February 2020.

Consumers typically pay down their credit cards in the first quarter, so those balances might dip below February 2020 levels again.

Credit unions’ credit card share was 6.3% in December, unchanged from September and down from 6.4% in December 2020.

CUNA’s monthly report also estimated that the nation’s 5,136 credit unions had 131.8 million members in December, up 3.9% from a year earlier. It also showed:

• Total loans grew 7.5% to $1.28 trillion in the 12 months ending Dec. 31, and rose 1% from the previous month.
• Savings grew 12.9% to $1.82 billion in the 12 months ending Dec. 31 and rose 1.4% from the previous month.
• The 60-day-plus delinquency rate was 0.51% as of Dec. 31, compared with 0.59% a year earlier and 0.49% a month earlier.
• Loans per member rose 3.5% to $9,741 in the 12 months ending Dec. 31 and rose 0.7% from the previous month.
• Savings per member rose 8.6% to $13,835 in the 12 months ending Dec. 31 and rose 1.2% from the previous month.

The first look at industry-wide earnings and originations will come 2 p.m. ET Feb. 16 with Callahan & Associates’ quarterly Trendwatch webinar. The NCUA typically posts detailed fourth-quarter data in early March.