As credit unions loans recently inched up to nearly $600 billion, lending at some community banks has been down for at least the past five months.
An analysis of first quarter Call Report filings by SNL Financial of banks with less than $10 billion in assets showed that their loans had decreased by nearly 1% from the end of 2011. Lending was also down compared with the first quarter last year.
One of the reasons for the drop may be borrowers continuing to deleverage and pay down debts, said SNL Financial, a financial services data tracking firm. Aggressive competition to woo top borrowers has also caused some conservative community banks to walk away from deals, the firm noted.
Meanwhile, at the end of March, total loans held by credit unions inched up to $585.3 billion, according to CUNA Mutual Group’s May Credit Union Trends Report. Still, year to date, loans were down 0.3% but the annual gain was 2.1% and trending up.
An annual gain of 1.5% in real estate secured loans at credit unions is being driven by growth in fixed rate, first mortgages, the data showed. Used vehicle loan growth accounted for 51% of the annual change and member business loan growth of 6.5% accounted for another 21%.
For credit unions, the decreases were more apparent with home equity and second mortgages, which fell $6.1 billion as of March, and new vehicle loans, which were off by $3.0 billion, the trends report data showed.
Looking at the rest of the year, credit unions may see a 4.1% annual growth rate for the total loan portfolio. According to the trends report, this is a big improvement from the 0.4% average annual gain of the past three years, but well below long-term trends and what is needed to sustain capital growth via spread income.