Credit Union Newsletter #42
Anurag Mukherjee
Credit Union & Community Bank C-Suite Advisor | P&L and GTM | Data Scientist | Fintech Advisor & Podcaster
The Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, amid signs that inflation was moderating and the labor market was weakening.
It was the first interest rate cut since the early days of the Covid pandemic.
“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Federal Reserve statement said.
Credit unions slightly increased their share of auto lending from the first quarter basement to the second quarter, according to the latest Experian report.
But while the gain was tiny, the fact that it broke a streak of declines is a ray of sunshine.
Experian's?State of the Automotive Finance Market?for the second quarter released Sept. 5 showed credit unions originated 23.1% of the number of new and used car loans in the second quarter, down from 25.7% a year earlier but up from 22.9% in the first quarter.
Credit unions' share of total financing, which includes a growing number of leases, was smaller:
1.Credit unions' share of total financing was 20.2% in the second quarter, down from 23.3% a year earlier and up from 20.1% in the first quarter.
2.Banks' share of total financing was 24.4% in the second quarter, down from 24.7% a year earlier and 25.1% in the first quarter.
3.Captives' share of total financing was 30.9% in the second quarter, up from 28.5% a year earlier and down from 31.4% in the first quarter.
Used vehicle values shifted gears in August, Black Book reported.
After four months of declining values, the company’s seasonally adjusted Used Vehicle Retention Index increased 0.7% (1.0 points) in August to 146.0 from July (145.0), which is 10% below where it was at the same time in 2023, Black Book said.
The Index sits 27.5% above the March 2020 reading – the last pre-Pandemic month.
“After four consecutive months of the Index declining, the market stabilized in August,” stated Laura Wehunt, VP of Analytics. “Three years after the market experienced a decrease in new vehicle supply due to production shutdowns, the industry is now witnessing the effects of lower used supply. This low supply is stabilizing the market despite unfavorable conditions such as rising incentive levels, high-interest rates and increasing delinquency rates.
Credit unions in July again had one of their worst months in at least nine years as their auto loan portfolios fell at the largest annual rate since at least August 2014, according to the latest trade group data.
The?Credit Union Monthly Estimates?from America's Credit Unions released Aug. 13 showed total loan balances were $1.66 trillion on July 31, up only 3.8% from a year earlier — the smallest annual gain since at least August 2014.
Savings were $1.96 trillion, up 3.8% from a year ago. The loans-to-savings ratio was 84.5% as of July, unchanged from 84.5% a year earlier but up from 83.8%, a month earlier.
The recent peak annual growth rates for most major loan categories was in the fall of 2022 as demand recovered from the pandemic period.
Since then, many annual rates have slipped to record lows as the Fed's rate tightening has increased the effective federal funds rate from 0.08% in February 2022 to 5.33% in August 2023, where it has remained.?
NCUA data showed the number of credit union branches fell from March to June, the first quarterly drop since 2021's fourth quarter.
Credit unions had 21,914 branches, headquarters and other locations on June 30 — 14 less than they had three months earlier, according to a CU Times analysis of NCUA data.
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Generally, credit unions lost a large number of branches during the Covid-19 pandemic, and have been building back their net count since then. Bank branches had already been falling before the pandemic, and have continued to dwindle.
Credit unions lost 449 branches from December 2019 to December 2020, and then gained 362 through March.
Officials at the Wisconsin Credit Union League in Madison, Wis., announced Sarah Wainscott will be its next president/CEO once current President/CEO Brett Thompson retires at the end of the year.
The Board of Directors at The League made the announcement five months after?Thompson said he would step down?after 23 years of service.
"The Board is immensely grateful for Brett's decades of servant leadership, which has made The Wisconsin Credit Union League one of the strongest Leagues in the nation," Christine Moczynski, president/CEO of Prime Financial Credit Union and Board Chair of the League, said. "Brett's steadfast leadership has built a solid foundation of advocacy, collaboration and unity for Wisconsin's credit unions and our members.
Mountain America Credit Union announced Thursday it plans to exit New Mexico in coming months by spinning off its two branches in Albuquerque to Sandia Laboratory Federal Credit Union.
Sunward , which had nearly $4.1 billion in assets on June 30, said its assets would grow to $4.3 billion when the spinoff is complete. The deal was approved by the NCUA and requires a vote approving the deal from affected Mountain America members.
The term "spin-off" is usually associated with a transaction involving a business selling part of?its operation to another business. However, the term has special meaning under NCUA rules: It is essentially a transfer of assets to another credit union without a gain.
Officials with the $4.8 billion TDECU announced plans for the $141 million Space City Credit Union to merge into Houston's largest credit union. The merger will result in a new organization called Space City Financial.
According to?details of the proposed merger, the Lake Jackson, Texas-based TDECU's president/CEO, Isaac Johnson, will lead the new organization and Space City President/CEO Craig Rohden will retire after leading the Houston-based credit union for 30 years.
If approved by regulators, the newly merged credit union will have assets approaching $5 billion and nearly 400,000 members.
TruStage is making a $1-million direct cash contribution to the African-American Credit Union Coalition’s (AACUC) Future Fund, the company announced. The contribution will be paid out over three years.
“The Future Fund is a transformative new funding source for AACUC, created to ensure the long-term strength and sustainability of the organization regardless of economic downturns and socio-political headwinds. This contribution aligns with TruStage’s commitment to create a more inclusive financial ecosystem and help build a more diverse workforce that reflects current and prospective customers,” TruStage said.
“TruStage is committed to making a brighter financial future accessible to everyone,” said TruStage President and CEO, Terrance Williams. “The work AACUC does is critical to making that mission a reality in an increasingly diverse country. We're proud to partner with them and help more credit unions serve more members.”
? Curql , which describes itself as a collective of credit unions jointly investing?in fintech, has announced that Curql Fund II has surpassed yet another fundraise milestone:?$150 million.
The fund, which opened for investments in September 2023, reached its $100?million milestone in April 2024, Curql said.
“In just four short months, continued strong interest has driven an?additional $50 million?in investments, with?support from credit unions?such as?Abound, All In,?Alloya, BankFund, Clark County, Everwise, First Mark, GESA, Great Lakes, Greater Iowa, In?Touch, OneAZ, Service, SESLOC, Skyla, State Farm Federal Credit Union, TRUE Community?and many more across the nation,” Curql said in a statement.
Source – CUTImes, CUtoday Info, NBC News