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Credit unions overtake banks in 2019

Strong economic figures for credit unions. (Source: Issue1411 / Shutterstock)

Credit unions again increased their loan portfolios at a higher rate than banks in 2019, but banks have taken the lead in auto lending.

At the end of 2019, credit unions had $ 1.14 trillion in loans, 6.6% more than December 31, 2018. The increase continued a trend of slower loan growth – from December 2017 to December 2018, total loans increased by 8.9%, according to the Credit Union Trends Report of the CUNA Mutual Group of Madison, Wisconsin.

The growth of bank loans also slowed, and their growth rates were lower over the two years than those of credit unions. In banks, total loans and leases amounted to $ 10.5 trillion on December 31, up 3.6% from the previous year; from December 2017 to December 2018, it rose 4.4%, according to the FDIC’s Quarterly Banking Profile released on Tuesday.

Credit unions had higher loan portfolio growth rates than banks for real estate and credit cards. But the trends were similar: Credit unions and banks experienced slower credit card growth and higher mortgage loan growth in 2019 compared to 2018.

The biggest divergence in trends between credit unions and banks over the past year has been a sharp decline in auto loan growth for credit unions and a sharp increase for banks.

Auto loans are much more important to credit unions than banks. They represent about a third of the total loan portfolio of credit unions, but less than 5% of bank loans.

Total auto loans from credit unions increased 2.6% to $ 381.5 billion in 2019, down from a 10.1% increase in 2018.

At banks, auto loans rose 6.2% to $ 483.7 billion last year, from 1.2% in 2018.

New auto loans from credit unions fell 1% to $ 148.3 billion in 2019 after increasing 11.6% in 2018. Used auto loans increased 4.9% to reach $ 233.2 billion, up from 9% in 2018.

Steven Rick, chief economist at CUNA Mutual Group, said the slowing growth in auto loans was due both to increased aggressiveness by banks for such loans and to a decline in some credit unions because auto loans automobiles had become too large a part of their portfolios.

Some credit union leaders have said CU time they were retreating from positions that in some cases exceeded 50% of their portfolios.

In addition, Rick said that the entry of many credit unions into the indirect lending market has been a key driver of double-digit gains in recent years and that in 2019 the supply of new entrants has declined. potentials. Other contributing factors have been the decline in new auto sales and part of the increase in mortgage refinancing being “cash out” agreements that were used to pay off auto loans.

Meanwhile, credit unions have gained stakes from banks in credit cards and home loans.

Credit cards rose 6.5% to $ 66.8 billion at credit unions at the end of 2019, slowing from the 7.4% growth in 2018, according to CUNA Mutual Group.

At banks, the FDIC showed credit card balances stood at $ 941.6 billion as of Dec.31, up 4.2 percent from the previous year, also slowing down slightly from the previous year. 4.4% gain from 2018.

CUNA Mutual Group tracks home loans using the old NCUA categories which combine residential mortgages and home equity loans with commercial real estate backed loans.

In credit unions, first and second mortgage residential mortgages account for 87% of mortgage-backed loans. But at banks, residential mortgages and home equity lines account for only half of the mortgage-backed loans.

In credit unions, total home loans increased 9.3% to $ 572.6 billion as of December 31, compared with a growth rate of 8.8% in 2018.

At banks, loans guaranteed by real estate stood at $ 5,000 billion on December 31, up 3.2% from a year earlier, an improvement from the gain of 2.4% from 2018.

First mortgage loans from credit unions rose 10.4% to $ 479.5 billion, from 9.2% in 2018, while second mortgages increased 3.7% for to $ 93.1 billion, down from 6.9% growth in 2018. Both figures include commercial loans.

Banks’ family 1-4 residential mortgage loans rose 3.9% to $ 2.2 trillion in 2019, up from the 2.7% growth in the previous year. Home equity margins fell 8.9% to $ 342 billion last year, from an 8.6% drop in 2018.

The NCUA is expected to release data comparable to the FDIC’s Quarterly Banking Profile in early March.