The Trends Report made slight adjustments to CUNA's Monthly Credit Union Estimates released earlier in the month. In this case, its changes allowed total auto loan balances to show a slight 0.3% unadjusted May-to-June gain, compared to being flat in the CUNA report.

Steve Rick, chief economist for CUNA Mutual Group and the report's author, said gains were stronger in other areas, including credit cards and home loans.

Credit union loan balances grew at a 5.9% seasonally adjusted, annualized rate in June, which Rick said is better than the 4.9% pace set in June 2020 "during the worst of the economic crisis," but still below the 7% long-term average. Over the long run, credit union loan balances have risen on average 7% per annum.

Steven Rick

"Credit union loan growth is finally on the upswing as the economy reopens and vaccination rates improve," Rick said. "We are forecasting above trend credit union loan growth for the next two years (around 8%) as the economy resumes its normal growth, pent up demand is satiated and infrastructure spending kicks in."

That's a slight change from the last CUNA-CUNA Mutual Group forecast in June that forecast 5% annual growth in loan balances for 2021 and a 9% gain in 2022.

The Trends Report showed credit card balances rose at a 2.2% seasonally adjusted annualized rate from May to June, which Rick said was the first seasonally adjusted gain since October 2019.

"Rising gas prices, consumers venturing out again and spending on services will keep credit card loan growth in the positive territory for the remainder of the year," he said.

Mortgages have continued to be the strongest area of growth. Credit unions held $547.9 billion in first mortgages on June 30, up 1.9% from June and up 8.9% from a year earlier, without seasonal adjustments.

Credit unions had 4.8% of the nation's first mortgages in their portfolios as of June 30, up from 4.7% as of March 31 and 4.6% as of June 2020. Strategy is a major driver of those shares, which are based on totals from the Mortgage Bankers Association. While credit unions have been selling more of their mortgages in the past year, they still tend to hold a higher percentage in their portfolios than other lenders.

Measured by originations, credit unions have been losing share. Data from Callahan & Associates and the Mortgage Bankers Association showed that credit unions originated $80.9 billion in first mortgages in the second quarter, or 7.7% of the $1.05 trillion in originations by all lenders.

Rick said credit union loan quality continues to improve, with low charge-offs and a 60-day delinquency rate of 0.44% as of June 30, well below the 0.75% that has been considered the "natural" delinquency rate.

"The improving labor market is a major factor pushing the credit union loan delinquency rate to the lowest level in more than 25 years," Rick said. "Also contributing to the very low loan delinquency rates were credit union low forbearance programs, lower interest rates that helped consumers lower their debt servicing costs, enhanced unemployment benefits and stimulus checks.

"And finally, most job losses occurred in the service sector among low income jobs," he said. "Since low income workers typically can't obtain a large amount of debt, and if they did run into financial difficulty, they didn't have a large amount of debt to become delinquent."

Rick also predicted the number of credit unions would fall by 189 this year, up from the 143 lost in 2020. CUNA estimated 5,530 credit unions were in operation as of June, three fewer than in May and 154 fewer than in June 2020.

The gulf between large and small credit unions was reflected in their asset averages and medians. The average asset size of a credit union was $381.2 million in June, up "a remarkable 22% from a year ago," Rick said. Meanwhile, half of credit unions held less than $46.5 million in assets in June, a median that is 24% higher than a year earlier.

"The trend toward industry consolidation and bigger credit unions is only likely to accelerate due to the benefits of greater economies of scale, higher productivity and larger earnings that are all achieved with a larger asset base," Rick said. "Larger, more efficient credit unions will also raise the barrier to entry for new, small credit unions."