Annual deposit growth versus loan growth were taking very divergent paths as the U.S. credit union industry ended second-quarter 2022 (June 30, 2022). Lending to consumers and businesses accelerated at its highest year-over-year rate (16 percent) in nearly two decades, while deposit growth started slowing even more going into mid-year.

The latest released trends show that (in U.S. dollar percentages) year-over-year credit union industry lending growth was led by business/commercial loans (23.6 percent); used auto loans (17.4 percent); HELOCs and home equity loans combined (17.3 percent); first mortgages (16.4 percent); credit cards (12.4 percent); and new auto loans (11 percent). Data was recently made public by the National Credit Union Administration (NCUA) and compiled by the California Credit Union League.

The figures also reveal that after monumental increases were experienced each quarter over the past two years in members flooding cash into checking, savings, and other deposit accounts, this upward savings trend has significantly slowed down. U.S. credit unions’ combined outstanding dollar amount in deposits has plateaued at a new national record high of $1.88 trillion. While next quarter's trends will confirm whether this deposit level has flatlined for the time being — or maybe even poised to decline in the near future — so far it was only plateauing as of June 30.

From June 30, 2021 – June 30, 2022 (year-over-year unless otherwise noted), U.S. credit unions experienced the following additional trends:

Highlights (Annualized)
U.S. credit unions’ average member relationship grew by nearly $1,395 year-over-year, driven by an uptick in lending relationships and higher individual loan balances. This metric now sits at a record $23,379 ($13,993 in deposits per member and $9,386 in loans per member). By the second quarter of 2022:

• Membership reached 134 million (a new record), rising 4 percent (compared to 3.9 percent in the year-ago period prior). More than 5.5 million consumers joined a credit union over the past 12 months.
• Loans reached $1.4 trillion (a new record), rising 16 percent (compared to 5 percent in the year-ago period prior).
• Deposits reached $1.88 trillion (a new record), rising 8 percent (compared to 15 percent in the year-ago period prior).
• Assets reached $2.16 trillion, rising 8 percent (compared to 13 percent in the year-ago period prior).
• Investments dropped to $658 billion, declining -6 percent (compared to 31 percent in the year-ago period prior).
• Capital (retained earnings for net-worth purposes) declined to $206 billion, falling -3.6 percent (compared to 4 percent in the year-ago period prior).
  
  

Loan Trends (Annualized)
U.S. credit union loans reached $1.4 trillion (a new record), rising 16 percent (compared to 5 percent in the year-ago period prior). By the second quarter of 2022:

• Loan growth had been steadily ramping up each quarter for eight consecutive quarters. All lending categories were posting double-digit annualized growth.
• In 2022 versus 2021: 23.6 percent versus 14.6 percent (business/commercial loans); 17.4 percent versus 6.5 percent (used autos); 17.3 percent versus -8.1 percent (combined HELOCs/home equity loans); 16.4 percent versus 6.9 percent (first mortgages); 12.4 percent versus -1.8 percent (credit cards); and 11 percent versus -0.5 percent (new autos).
• Total lending growth (all loans combined) was 16.2 percent (2022) versus 4.9 percent (2021).
• Loan growth reached the highest annual rate (16 percent) in nearly two decades.
• Mid-year loan originations topped $400 billion for the first time. Credit unions were capturing their largest share of auto and mortgage loans in middle-of-year — ever (23.2 percent in auto and 8.3 percent in first mortgages).
• Consumer lending is driving origination growth as real estate lending slows.
• A surge in indirect lending boosted auto lending success.
• Secondary market sales fell as mortgage lending slowed and interest rates rose.
• The loan-to-deposit ratio jumped 4.5 percentage points to 74.7 percent, the largest quarterly increase on record.
• Loan participations that were purchased declined as organic loan growth accelerated.
• While credit card and auto loan delinquency rates increased, overall loan delinquency and net charge-offs remained well below historical norms.
  
  

Deposit Trends (Annualized)
U.S. credit union deposits reached $1.88 trillion (a new record), rising 8 percent (compared to 15 percent in the year-ago period prior). By the second quarter of 2022:

• Deposit growth was decelerating from its year-over-year pace across all deposit products, significantly slowing from its prior COVID-19 pandemic-era annualized growth rate.
• In 2022 versus 2021: 13.9 percent versus 23.2 percent (money market); 11.7 percent versus 31.8 percent (checking); 10.3 percent versus 17.8 percent (savings); -1.2 percent versus 1.8 percent (IRA/Keogh); and -7.3 percent versus -10.3 percent (certificates of deposit).
• Total deposit growth (all deposits combined) was 8.2 percent (2022) versus 15 percent (2021).
• Annual deposit growth is returning to single digits for the first time in two years.
• Second-quarter 2022 experienced the smallest net-quarterly deposit growth since third-quarter 2018.
  
  

Earnings & Capital Trends (Annualized)
U.S. credit union investments dropped to $658 billion, declining -6 percent (compared to 31 percent in the year-ago period prior). Credit union capital (retained earnings for net-worth purposes) declined to $206 billion, falling -3.6 percent (compared to 4 percent in the year-ago period prior). By the second quarter of 2022:

• Investment revenue growth accelerated, driven by loan and investment income combined.
• Yield on investments moved up as cost-of-funds (deposits) and yield-on-loans were slower to reprice.
• Net interest margin (NIM) increases and the gap between the margin and operating expense ratio (OpEx) shrunk.
• Non-interest income declined.
• “Other” operating income contracted due to lower gains on secondary market loan sales.
• Provision for loan loss expenses are slowing increasing.
• Return on assets (ROA) declined 25 basis points to 0.86 percent (from 1.11 percent in the year-ago period).
• The net-worth ratio jumped 25 basis points to 10.4 percent.
• However, unrealized losses reduced the capital ratio to 9.5 percent as a challenging bond market was evident in investment portfolios.
• Credit unions are hiring to meet record loan demand and member service needs. Annualized industry hiring growth was 4.8 percent as outstanding employees (both full-time and part-time combined) reached nearly 350,000.
  
  

All trends were obtained from the Second Quarter 2022 Trendwatch webinar hosted this past week (view the slide presentation here) by Washington, D.C.-based Callahan & Associates.

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