Credit Union Liquidity Tightens as Savings Freeze in November

Credit unions in November had their highest loan-to-savings ratio since at least August 2014 as loan growth continued to slow and savings were essentially flat, according to a monthly report from America’s Credit Unions.

The Monthly Credit Union Estimates showed savings were $1.89 trillion on Nov. 30. They were up a bare 1% from a year earlier and down 0.2% from October, following a September-to-October drop of 0.6%. The average October-to-November gain from 2016 through 2022 was 0.5%.

NCUA Chair Todd Harper said in December that credit unions have been trying to attract savings by increasing certificates of deposits and other high-cost timed deposits. In November, checking and regular savings accounted for 52.4% of total savings, down from 58.5% a year earlier.

The tightening liquidity is being accompanied by slowing loan growth. Total loans were $1.63 trillion, up 7.4% from a year earlier and up 0.4% from October, compared with a seven-year average November gain of 0.6%.

As a result, the loans-to-savings ratio was 86.2% as of Nov. 30, its highest level since at least August 2014 and surpassing the previous record of 86.0% in January 2019. It was up from 81.0% a year earlier and 85.7%, a month earlier. The 2016-2022 average for November is 79.9%.

Delinquencies also rose sharply. The 60-day-plus delinquency rate was 0.77% on Nov. 30, compared with 0.62% a year earlier and 0.73% a month earlier, compared with an average November rate of 0.56%. Rising delinquencies and net charge-offs ate into net income in the third quarter.

Over the past year, most loan types have shown remarkable consistency with the 12-month growth trend for total loans, which peaked at 19% in November 2022.

The exception has been second-lien real estate loans, including home equity lines of credit.

HELOCs and other second liens were growing 24.4% in November 2022, and accelerated to 40.2% in April. The 12-month growth rates have been generally slowing, but they still grew 25.9% to $133.6 billion in November 2023 from a year earlier and up 2.9% from October, compared with an average November gain of close to zero.

The report from the trade group formerly known as CUNA showed the nation’s 4,786 credit unions had 141.8 million members Nov. 30, up 3.3% from a year earlier and up 0.1% from October, compared with an average November gain of 0.2 percentage points.

The report also showed:

• First-lien mortgages grew 4.8% to $583.1 billion from a year earlier and down 0.2% from October, compared with an average November gain of 0.6%.
• New car loans grew 3.7% to $179.2 billion from a year earlier and up 0.4% from October, falling short of the average November gain of 0.7%.
• Used car loans grew 5.4% to $330.6 billion from a year earlier and up 0.4% from October, matching the average November gain.
• Personal loans grew 11.6% to $70.5 billion from a year earlier and up 0.3% from October, which was slower than the average November gain of 1%.
• Credit cards grew 12.8% to $82.6 billion from a year earlier and up 2.4% from October, surpassing the average November gain of 1.7%.
• Assets were $2.27 trillion, up 3.5% from a year earlier and up 0.8% from October, compared with an average November gain of 0.6%.