Credit Union Newsletter - #38
Anurag Mukherjee
Helping Credit Unions & Community Banks win with Data | World #1 Podcast for Women of Community Banking
Credit unions have traditionally been significant players in the auto loan market, offering competitive rates and personalized service. Throughout 2021 and 2022, they leveraged aggressive prices and strong member-focused strategies to make significant gains in vehicle financing market share.
2023 was a different story for credit unions, which experienced a 5% decline throughout the year, dropping behind banks and captives in the auto loan pricing wars. This decline underscores the need for credit unions to reassess their strategies and leverage new opportunities to remain competitive.
The good fortune for credit unions in May was that auto lending remained flat, helping overall lending rise modestly from the previous month, according to a report from America's Credit Unions.
The trade group's Monthly Credit Union Estimates released Tuesday showed credit unions held $1.64 trillion in total loans on May 31, up 4.1% from a year earlier and up 0.4% from April, compared with an average April-to-May gain of 1.1% from 2014 to 2023.
The one-month gain in the total loan balance was the same as April's, which followed three months of declines caused by eroding auto loan balances.
New and used auto loans stood at $500.3 billion, down 0.2% from a year earlier but showing a 0.1% gain from April. Even though that's far below the average April-to-May gain of 1%, it's better than April's scant 0.05% gain and the four months of declining balances before that.?
Credit unions performed worse than banks in building credit card debt in May, while outperforming banks on automotive and other consumer term loans, according to the Federal Reserve.
The Fed's G-19 Consumer Credit Report released Monday showed credit unions held $81.5 billion in credit card debt, up 6.5% from a year earlier and up 0.8% from April, compared with the 10-year average April-to-May gain of 1.3%.
Credit unions' share was 6.3% in May, unchanged from either a year earlier or April, while banks' share was 90.8% in May, up from 90.7% in April and 90.4% in May 2023.
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A new analysis ranks U.S. states according to levels of loan delinquencies.
To highlight the places where people are having the most trouble paying their debts, WalletHub said it analyzed proprietary user data from Q1 2024 for the 50 states. Mississippi has the biggest debt delinquency problem. Around 12.7% of individual loans and lines of credit in the state were delinquent in Q1 2024, the highest percentage in the country,” WalletHub reported.
Credit unions that have not struck bank deals have better net interest margins than their banking-buying peers, a new study from S&P Global Market Intelligence found.
In the first quarter of 2024, the median NIM for credit unions that have not acquired banks was 3.89%, S&P found. That compared with 3.20% for credit unions that have bought banks and 3.25% for community banks.
Median NIMs between the three groups historically moved largely in line with each other before a divergence that began in 2023.
The NCUA’s fifth Diversity, Equity, and Inclusion Summit was hosted in Minneapolis, Minnesota last week from July 9-11th. The event is aimed at creating an opportunity for credit union professionals to “explore the value proposition of diversity, equity, and inclusion in the credit union industry and at the NCUA; share best practices; develop solutions to industry-specific challenges; and network with one another.”
The theme for this year’s summit was “DEI: Here to Stay,” referencing both the commitment of credit unions in providing access to financial services for all communities and the commitment of those credit unions in supporting DEI programs
?Sources – Cutimes, CUInsights,CU Today Info