Credit Union Savings Fall in July

CUNA has estimated credit unions lost savings from June to July at a rate not seen in five years and tightening liquidity with the loan-to-share ratio spiking to 84.7%.

CUNA’s Monthly Credit Union Estimates found savings at $1.89 trillion July 31, down 1.0% from June, compared with an average July gain of 0.2%. It was the biggest consecutive-month drop in savings since a 1.1% drop in July 2018. Savings ended July at a level below that of March and are up only 0.2% higher than July 2022.

Loan balances grew from June to July at a pace only slightly slower than normal, thanks to gains that were much bigger than usual for credit cards and unsecured loans.

The result was the 84.7% loan-to-share ratio, up from 83.3% in June and reaching its highest level since it hit 86.0% in January 2019. The loan-to-share ratio remained in the 83% to 84% range from February 2019 to January 2020. With the pandemic, it fell to lows in the 69%-to-70% range from March 21 to Sept. 21 as savings rose to record levels.

Loan growth was running about 1% to 2% per month from February 2022 to December 2022, but began moderating in the fourth quarter as credit unions began giving up market share in auto lending. That weakness continued through July as car loans grew at half the average June-to-July gain over the previous seven years.

Total loan balances were $1.6 trillion on July 31, up 0.7% from June, compared with an average July gain of 0.9%. They were 11.6% higher than a year earlier.

New car loans rose 0.7% from June to $179.2 billion in July, compared with an average July gain of 1.1%. They were up 7.7% from a year earlier.

Used car loans rose 0.2% from June to $326.4 billion in July, compared with an average July gain of 1.0%. They grew 8.9% from a year earlier.

First mortgages came in well below average again as high rates encourage mortgage retention, contributing heavily to the scarcity of home to buy, and have largely wiped out the refinance market. First mortgages fell 0.1% from June to $571.2 billion in July, compared with an average July gain of 0.8%. They grew 5.1% from a year earlier.

Home equity lines of credit and other second liens again did slightly better than usual. They grew 2% from June to $126.4 billion in July, compared with an average July gain of 1.6%. They were up 33.6% from a year earlier.

The big gainers were unsecured consumer loans.

When the NCUA released its second-quarter data Sept. 7, Board Chair Todd Harper said he was concerned about falling savings from March to June and rising member balances on credit cards.

Credit card balances fell to abnormally low levels during the savings surge. Balances recovered by April 2022 and have been generally growing at a brisk pace since then, although balance growth had slowed in May and June.

Data from the Fed’s G-19 Consumer Credit Report released Sept. 8 showed credit unions held $79.3 billion in credit card balances on July 31, up 2.2% from June, compared with an average July gain of 1.0%.

Credit unions’ share of credit card debt was 6.4% in July, up slightly from 6.3% in June and 6.2% in July 2022. Banks’ share was 90.3% in July, down slightly from 90.4% in June, but up from 90.1% in July 2022.

CUNA data also showed a large increase in unsecured term loans. Personal loans rose 1.3% from June to $69.5 billion in July, compared with an average July gain of 0.6%. They grew 15.7% from a year earlier.

CUNA’s report covered 4,858 credit unions with 140.2 million members as of July 31, up 3.9% from a year earlier and up rose 0.2% from June, compared with an average July gain of 0.3 percentage points.

The report also showed:

• The 60-day-plus delinquency rate was 0.65% as of July, compared with 0.51% a year earlier and 0.60%, a month earlier. It was 0.63% in July 2019.
• Loans per member were $11,412, up 7.4% from a year earlier, and rose 0.5% from June, compared with an average July gain of 0.6%.
• Savings per member were $13,475, down 3.5% from a year earlier, and fell 1.2% from June, compared with an average July dip of 0.2%.