Credit Union Trends Report: Economic recovery is underway

In its January 2021 Credit Union Trends Report, based on data from November, the ninth full month of the COVID-19 pandemic, CUNA Mutual Group reported that economic recovery is underway with herd immunity expected by the fourth quarter of 2021.

During November, credit union loan balances rose 0.05%, below the 0.6% pace reported in November 2019, while credit union new-auto loan balances fell at a -4.2% seasonally adjusted annual rate in November, according to the report. The report also noted that credit union return-on-asset ratios came in at 0.65% (annualized) for the first nine months of 2020, the lowest since 2010, due to lower net interest margins, lower fee income and higher provision for loan losses.

The report also found that in November 2020:

  • the economy contracted at a 3.5% pace in 2020, the worst economic performance since 1946;
  • the economy is expected to grow 3.5% in 2021 as we slowly reach herd immunity by the fourth quarter;
  • credit union loan growth is expected to reach 6.0% in 2021; and
  • credit union deposit growth is expected to reach 14% in 2021 due to additional stimulus checks.

The report’s economic forecast has the economy expanding at a 2% annualized pace in the first quarter of 2021 (0.5% non-annualized pace) and 3.5% during all of 2021, due to expansionary fiscal policy and the reaching of herd immunity in the second half of 2021.

The Credit Union Trends Report is a monthly “pulse check” on the state of the credit union marketplace, often placed in a historical context. The report includes data from two months prior and is published and distributed by Steven Rick, chief economist for CUNA Mutual Group. The Trends Report is intended to provide a review and analysis of recent credit union financial performance and operational results in the context of recent economic activity. Data and analysis are provided to establish standards against which credit unions’ own performance can be compared.

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