Loan Portfolios Shrink for Third Month in a Row

Credit union loan balances sunk for the third month in a row — something that hasn’t happened in at least 10 years, according to data from America’s Credit Unions.

The trade group’s Monthly Credit Union Estimates report released Wednesday showed balances have now fallen for three months in a row for new cars and four months for used cars. The total auto balance also fell slightly from a year ago, also a 10-year first.

First mortgages showed a gain from February to March, while second liens continued consecutive increases stretching back to April 2022.

The report found the nation’s 4,736 credit unions held $1.63 trillion in total loans March 31, down a scant 0.02% from February, compared with an average February-to-March gain of 0.7% over the previous 10 years. Loans grew 4.8% from a year earlier.

However, savings improved, easing liquidity. Savings were $1.97 trillion as of March 31, up 2.5% from a year earlier and rose 1.6% from February, compared with an average March gain of 2.2%.

The loans-to-savings ratio was 82.86% as of March 31, compared with 81.0% a year earlier and 84.2% a month earlier, compared with an average March ratio of 77.8 percentage points.

Auto lending has been weak nationally. On Tuesday the Fed reported all lenders held $1.56 trillion in car loans in March, up 2.6% from a year earlier. Auto loans rose just 0.1% from Dec. 31 to March 31, the smallest quarter-to-quarter gain since March 2020 and well below the 10-year average of 0.8% gains for the first quarter.

By comparison, the report from the trade group showed credit unions holding $498.6 billion in total car loans March 31, down 0.7% from a year earlier and down 1.7% from Dec. 31.

The 12-month drop in the total auto loan portfolio is the first drop since at least August 2014. From that date through February 2024 the smallest year-ago gain had been 0.8% in June 2020.

New car loans fell 3.4% to $172.7 billion in March from a year earlier and fell 1.9% from February, compared with an average March gain of 0.5%.

Used car loans grew 0.7% to $325.9 billion in March from a year earlier and fell 0.5% from February, compared with an average March gain of 1%.

The trade group’s report also showed:

• Unsecured consumer term loans grew 9% to $71.2 billion in March from a year earlier and rose 0.4% from February, compared with an average March drop of 0.5%.
• First-lien mortgages grew 3.6% to $588.2 billion from a year earlier and rose 0.3% from February, compared with an average March gain of 1.1%.
• Home equity lines of credit and other second-liens grew 23.4% to $140.1 billion from a year earlier and rose 1.2% from February, compared with an average March drop of 0.7%.