Auto Loans Slip From Credit Union Portfolios

Credit unions’ balance of auto loans fell in the third quarter, causing its share of U.S. auto loans to shrink, according to a CU Times analysis.

Credit unions held $487 billion in auto loans as of Sept. 30, according to NCUA data pulled from Callahan’s Peer Suite, down 3.5% from a year earlier and down 1.4% from June.

Data released Thursday in the Fed’s G-19 Consumer Credit Report showed banks, credit unions, banks and all others held $1.57 billion in U.S. auto loans as of Sept. 30.

The two data sets show credit unions’ share of auto loan balances was 31.1% on Sept. 30, down from 32.5% a year earlier and 31.6% in June.

The drop is probably a little milder.

Callahan’s data as of Friday included call reports from 4,566 credit unions, which it said represented 99.45% of all credit union assets.

If you assume the ratio of auto loans to assets is constant, the missing 0.55% of Callahan data would lift auto loans to $490 billion, which would be 31.3% of U.S. loans.

And going with the $490 billion estimate, credit union balances fell 3% from a year earlier and fell 0.8% from June. Subtracting credit unions from the national mix, the Sept. 30 balance all other lenders and investors rose 2.9% from a year earlier and rose 0.9% from June.

And then if you add back the $2.5 billion in auto loans credit unions have sold for securities, the September share rises to 31.4% and the drop from a year ago subsides to 2.5%.

Still, credit unions are doing worse while competitors are doing better.

With the absence of origination data for credit union auto loans from NCUA or trade groups, the best answer on how credit unions are performing against their competitors for auto loans will come from Experian’s quarterly State of the Automotive Finance Market report by early December.

The monthly G-19 includes auto loans in aggregate only on the quarter-ending months. The usual monthly numbers that break out credit cards and consumer term loans by banks and by credit unions were less exciting this month.

Credit unions held $83.4 billion in credit card debt, up 5.3% from a year earlier and up 0.1% from August, compared with an average August-to-September gain of 0.2% from 2014 through 2023.

Credit unions’ share was 6.3% in September, unchanged from a year earlier and August. Banks held $1.2 trillion in credit card debt, up 5.4% from a year earlier and down 0.48% from August, compared with the 10-year average gain of 0.1%. Banks’ share was 90.8% in September, unchanged from August and up from 90.5% in September 2023.

The Fed revised downward August’s credit card balance for credit unions by down 0.7% from the $83.9 billion reported a month ago to $83.3 billion in Thursday’s report. Banks’ figures were essentially unchanged.

The monthly Velera Payments Index had shown a weaker 12-month increase for credit cards than in the Fed report. Among members whose cards are processed by Velera, the nation’s largest payments CUSO, their average balance in September was $2,955, up 3.5%. The total balance of credit cards handled by Velera grew 3.6% of the 12 months.

The Velera credit card delinquency rate rose from 2.47% in August to September to 2.62%, its highest level since January’s 2.67% delinquency rate and 39 basis points higher than in September 2023.

The G-19 also includes totals by lender type for non-revolving consumer debt, which in the case of credit unions is primarily auto loans plus personal loans and a few other small categories. Credit unions held $569.8 billion in non-revolving consumer loans as of Sept. 30, down 2.1% from a year earlier and down 0.6% from August, compared with the 10-year average gain of 0.7%.

Banks held $902.2 billion in non-revolving consumer debt Sept. 30, down 2.6% from a year earlier and up 0.5% from August, which was close to the 10-year average gain of 0.6%.

CU Times’ calculations ignore the total amount for all lenders of non-revolving consumer debt because nearly half the total is student loans, a total that — like auto loans — is disclosed only every three months. And although it overwhelming represents federal student loans, the amount held by others is not disclosed.

As of Sept. 30, student loans were $1.77 trillion, up 2.4% from a year earlier and representing 47% of all non-revolving consumer debt.