CUNA: January Loan Growth Strong, Savings Weak

Credit union gains accelerated for cars, personal loans and second mortgages in January, while credit cards and first mortgages slowed, CUNA reported.

CUNA’s Monthly Credit Union Estimates report released Monday showed total loans were $1.55 trillion Jan. 31, up 19.4% to from a year earlier. Loans rose 0.5% from December, compared with a 0.4% average gain for December-to-January from January 2016 through January 2022.

Savings were $1.86 trillion, up 2.3% from a year earlier and down 0.9% from December, which was flat on average over the previous seven years.

CUNA Chief Economist Mike Schenk said January’s numbers show a continuation of trends seen last year.

“Loan growth has slowed moderately compared with January a year ago,” when the month-to-month change was 0.6%, he said. “Savings actually declined a bit in January, which is pretty typical for January.”

CUNA estimated January’s 60-day-plus delinquency rate was 0.55%, up from 0.49% a year earlier and 0.54% in December. CUNA revised downward the December rate from the 0.58% reported last month.

Schenk said delinquency and net charge-off rates continue to rise, but remain below pre-COVID levels. January’s delinquency rate was still about 10 basis points lower than pre-pandemic levels and even below the cyclically low levels for March, when households typically pay down holiday debt with tax rebates.

NCUA data showed loan growth set a record at 20.5% last year. This year, CUNA is expecting a more normal 7% growth rate.

Savings, which grew 3.8% last year, are expected to grow 6% this year — only slightly lower than historical trends.

CUNA’s estimates showed loans per member were $11,165 in January, up 14.3% from a year earlier, and rose 0.4% from December, compared with an average gain of 0.1%.

Savings per member were $13,436, down 2.1% from a year earlier, and fell 1.1% from December, compared with an average drop of 0.3%.

Despite lower savings rates at both credit unions and banks, Schenk said households are still sitting on about $1.5 trillion in savings.

“The pile of savings in the household sector is still quite high,” he said. “That’s good news.”

But uncertainty remains in the wake of the failures of Silicon Valley Bank on March 10 and Signature Bank on Sunday.

On Tuesday, the U.S. Bureau of Labor Statistics reported the Consumer Price Index rose 0.4% in February on a seasonally adjusted basis, after increasing 0.5% in January. Inflation was up 6.0% over 12 months.

NAFCU Economist Noah Yosif said the report shows persistent inflation, but the Fed is likely to raise rates by only 25 basis points when its next meeting ends March 22 because of the bank failures.

“The laggard decline in headline and core CPI affirms recent indications that inflation remains persistent, buttressed by strong, albeit moderating, employment and wage growth,” Yosif said.

“However, with heightened market volatility emanating from the traditional banking sector, the Federal Reserve will most likely prioritize financial stability as the more immediate concern relative to inflation,” he said.

CUNA’s report showed the nation’s 4,928 credit unions had 138.4 million members Jan. 31, up 4.5% from a year earlier, and up 0.1% from December. The report also showed:

• Assets were $2.19 trillion, up 4.6% from a year earlier, and fell 0.1% from December, compared with an average 0.4% gain for January.
• New car loans grew 22.6% to $177.7 billion from a year earlier, and rose 0.5% from December, compared with an average January gain of 0.4%.
• Used car loans grew 20% to $323 billion from a year earlier, and rose 1% from December, compared with an average January gain of 0.6%.
• Unsecured consumer term loans (excluding credit cards) grew 27.9% to $68.3 billion from a year earlier, and rose 3.7% from December, compared with an average January drop of 0.1%.
• Credit cards grew 14.8% to $73.9 billion from a year earlier, and fell 2.2%.from the previous month, compared with an average January drop of 1.2%.
• First-lien mortgages grew 0.9% to $556.3 billion from a year earlier, and fell 2.5%.from the previous month, compared with an average January drop of 0.5%.
• Second-lien mortgages grew 32.1% to $112.8 billion from a year earlier, and rose 1.9% from December, compared with an average January gain of 0.2%.