Credit Unions Inch Forward on Consumer Loans
Credit unions gained a slightly larger share of consumer lending in May, as their loans for cars and credit cards grew faster than banks, the Federal Reserve reported Monday.
Total consumer credit stood at $3.8 trillion on May 31, up 5.8% from a year earlier, according to the Fed’s monthly G-19 consumer credit report.
Credit unions held $398.2 billion of that debt on May 31, up 11.3% from a year earlier. Their share stood at 10.56% May 31, up from 10.54% in April and 10.04% in May 2016.
While credit unions still have a tiny share of the credit card market, they are increasing the value of their card debt faster than banks. Credit unions' card debt grew 9.6% to $53.1 billion in May. While their 5.43% share was unchanged from April it was up from 5.27% in May 2016.
Banks held $805.8 billion in credit card debt on May 31, up 5.7% from a year earlier. Banks' share of credit cards was 83.42% in May, down a single basis point from April and 50 basis points from a year ago.
Credit unions held $348.3 billion in non-revolving loans May 31, up 11.7% from a year earlier. Their share was 12.35% in May, up from 12.30% in April, and 11.69% in May 2016.
Non-revolving credit includes government-owned student loans, private student loans and motor vehicle loans. In March, the total included $1.4 trillion in student loans (51%) and $1.1 trillion in auto loans (40%). Those numbers are reported quarterly, and will be released again next month.
For credit unions, non-revolving debt is primarily car loans, which were growing at an accelerated pace through April, ending that month at $321.8 billion, according to CUNA Mutual Group's latest Credit Union Trends Report.
Some credit unions are reporting lower volume or slower car loan growth than last year.
Public Service Credit Union ($2.1 billion in assets, 214,085 members) has tripled its car loan portfolio since the end of 2012. The Denver credit union held $1.2 billion in new and used car loans throughout Colorado on March 31, 41% more than a year earlier.
This year, loan originations will rise 15% to 20%, while runoff and sales of indirect loans will mean smaller gains on the books, said Chad Shane; Public Service's senior vice president and chief lending officer.
“The first quarter was tremendous,” Shane said. “We don’t anticipate that to happen for the entire year. It stabilized more in the second quarter to what we expected.”
The Fed’s report comes as predictions of economic growth have been drifting downward since early May.
The New York Fed economists’ Nowcast stands at 2.0% annual rate for the second quarter and 1.8% for the third quarter. The Atlanta Fed’s GDPNow model issued a rosier 2.7% forecast July 6, but it down from 3% only three days earlier.
President Trump’s budget was based on the assumption of 3% growth, but he campaigned on 4% growth.