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Credit unions in August continued to outpace past lending performance, but delinquency rates rose over the summer faster than previously estimated and surplus funds shrank from July, according to CUNA.
CUNA's Monthly Credit Union Estimates released Oct. 6 showed especially strong month-to-month gains in auto loan balances, but all major categories showed gains that exceeded averages over the previous seven years. Twelve-month gains were the highest since at least August 2014 for total loans, total car loans, personal loans and second-lien real estate loans.
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However, the Fed's G-19 Consumer Credit Report released Oct. 7 showed credit unions lost share to bank credit cards.
CUNA estimated that total loans grew 17.8% to $1.47 trillion from a year ago. The July-to-August gain was 1.9%, compared with an average August gain of 1% from August 2015 through August 2021. Loans per member were $10,887, up 14.3% from a year ago, and rose 1.6% from the previous month.
Credit unions have been ticking up auto loan rates since January. The average rate for a 48-month loan on a new car rose from a low of 3.13% in January to 3.75% in August.
But auto balances still grew.
New car loans grew 19.8% to $171.5 billion from a year ago, and rose 2.8% from the previous month, compared with an average August gain of 1%.
Used car loans grew 17.8% to $303.3 billion from a year ago, and rose 1.4% from the previous month, compared with an average August gain of 0.9%.
Some other measures showed trouble.
CUNA revised delinquency rates upward from April through July. It previously reported the 60-day-plus delinquency rate for July was 0.45%, but now it appears as 0.50% — its highest mark since 0.52% in February 2021. The delinquency rate was 0.64% in February 2020, the month before COVID-19 was declared a pandemic. It rose to a pandemic high of 0.67% in April 2020, but fell to a low of 0.45% by March 2021.
The new report showed August's delinquency rate was 0.49%, up from 0.45% a year earlier but slightly lower than the revised 0.50% for July 2022.
Surplus funds (or cash plus investments) were $634.2 billion on Aug. 31 — the lowest level since January 2021. August's surplus funds fell 12% from a year ago, and fell 4.8% from the previous month. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) fell from 14.8% in July to 13.5% in August.
Savings stood at $1.88 trillion on Aug. 31, up 6.6% from a year ago, but down 0.2% from the previous month. One-year certificates led savings growth during the month rising 2.9%. On the decline were money market accounts, falling 0.7%, followed by drops of 0.8% for share drafts and 0.9% for regular shares.
Savings per member were $13,983, up 3.4% from a year ago and down 0.5% from the previous month.
The Fed showed credit cards grew 13.3% to $69.8 billion from a year ago, and rose 1.2% from the previous month, compared with an average August gain of 1%.
Credit unions' share of credit card debt was 6.2% in August 2022, down from 6.3% in July and 6.4% in August 2021.
Of course, the reason for lost share was that as well as credit unions did, banks did even better.
Banks held $1.02 trillion in credit card debt on Aug. 31, up 17% from a year earlier and up 2% from July. Banks' share rose to 91.0% in August from 90.9% in July and 90.1% in August 2021.
CUNA tracked the results of 5,029 credit unions with 134.6 million members, up 3.1% from a year ago and a rise of 0.3% from the previous month. Its report also showed:
- Unsecured consumer term loans (excluding credit cards) grew 20.2% to $62.1 billion from a year ago, and rose 2.7% from the previous month, compared with an average August gain of 1.2%.
- First-lien mortgages fell 1.5% to $548.1 billion from a year ago, but rose 1.1% from the previous month, compared with an average August gain of 0.9%. The Mortgage Bankers Association's Sept. 19 forecast expected first-mortgage balances nationally would be $13.21 trillion on Sept. 30, up 7.6% from a year earlier and up 1.7% from June 30.
- CUNA showed home equity lines of credit and other second-lien mortgages grew 14.3% to $96.7 billion from a year ago, and rose 3.5% from the previous month, compared with an average August gain of 0.7%.
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