CUNA Finds Tighter Lending Eases Liquidity

Poor loan performance and so-so savings gains helped ease liquidity a smidge in September at credit unions, a CUNA report showed.

CUNA’s Monthly Credit Union Estimates posted Tuesday showed the total loan balance rose 0.5% from Aug. 31 to reach $1.62 trillion on Sept. 30, compared with an average August-to-September gain of 0.8% from 2016 through 2022.

Savings rose 0.6% from August to $1.9 trillion in September, on par with the average September gain of 0.6%.

But over the past year loan balances were up 9.2%, while savings were up just 0.7%.

The result was a loan-to-savings ratio of 85.1% on Sept. 30, up from 78.5% a year earlier, but down from its recent peak of 85.2% in August.

Almost every major loan category did worse than average from August to September.

The exception was second-lien mortgages, which grew 28% to $129.6 billion from a year earlier, and rose 1.8% from August, compared with an average September gain of 0.1%.

Home equity lines of credit rose 26.2% to $84.2 billion from a year earlier, and rose 2.4% from August. Second mortgages rose 33% to $45.3 billion from a year earlier, and fell 6.3% from August.

First-lien mortgages grew 6% to $583 billion from a year earlier, and rose 0.5% from August, compared with an average September gain of 1%.

Fixed-rate first mortgages rose 3.4% to $485.2 billion, and rose 2.3% from August. Adjustable-rate first mortgages rose 21.4% to $97.2 billion, and fell 4.4% from the previous month.

Car loans were a wreck with total loans falling slightly from August to September. Cox Automotive has reported retail sales for new cars rose from August to September to October, while retail sales of used cars fell in those months.

Credit union’s new car loans fell 0.4% from August to $179.8 billion in September, compared with an average September gain of 0.4%. Used car loans were flat from August to September at to $330.4 billion, compared with an average September gain of 0.8%.

Yet, credit unions have done better than others — at least through the weak measure of automotive loans held.

Data from the Fed’s G-19 Consumer Credit Report released Tuesday showed that balance of loans held by investors, banks and other non-credit union lenders grew 0.9% from June 30 to Sept. 30, compared with 1.0% for credit unions. Over the previous 12 months credit union balances grew 6.5% compared with 4.1% for others.

As a result credit unions’ share of the nation’s total $1.55 trillion automotive loan portfolio stood at 32.9% on Sept. 30, unchanged from June, up from a 32.4% a year earlier, but down from the recent peak of 33.1% in March.

The best measure of credit union performance with auto loans will come in about a month from Experian’s quarterly “State of the Automotive Finance Market” report.

The last report showed credit unions produced 22.5% of automotive loans and leases in the second quarter, with their share slipping each quarter since reaching a peak of 28.4% in 2022’s third quarter.

Fed G-19 data showed credit unions’ credit card balances grew 13.2% to $79.6 billion from a year earlier, and rose 0.1% from August, compared with an average September gain of 0.4%. Credit unions’ share was 6.4% in September, unchanged from August and up from 6.2% in June 2022.

Banks held $1.1 trillion in credit card debt, up 10.6% from a year earlier, but down 0.2% from August to September, compared with an average September gain of 0.1%. Banks’ share was 90.5% in September, unchanged from August and up from 90.2% in June 2022.

Credit unions’ unsecured consumer term loans grew 12.5% to $71 billion from a year earlier, and rose 1% from August, compared with an average September gain of 1.6%.

CUNA’s report covered the nation’s 4,818 credit unions. Their membership was 141.3 million on Sept. 30, up 3.3% from a year earlier, and up 0.2% from August, compared with an average September gain of 0.4 percentage points. The report also showed:

• Assets were $2.26 trillion, up 3.6% from a year earlier, and rose 0.5% from August, compared with an average September gain of 0.4%.
• The 60-day-plus delinquency rate was 0.72% as of Sept. 30, compared with 0.53% a year earlier and 0.70%, a month earlier. It stood at 0.67% in September 2019.
• Loans per member were $11,461, up 5.8% from a year earlier, and rose 0.3% from August, compared with an average September gain of 0.4 percentage points.
• Savings per member were $13,469, down 2.5% from a year earlier, and rose 0.4% from August, compared with an average September gain of 0.2 percentage points.