In its November 2021 Credit Union Trends Report based on data from September, CUNA Mutual Group reported that for the first time in credit union history, share drafts make up a larger percent of credit union total deposits (20.2%) than share certificates (14.5%).
Three factors drove this savings distribution shift, according to the report:
- First, record-low interest rates by the Federal Reserve allowed credit unions to follow suit and lower deposit interest rates on share certificates and money market accounts, like what they did in 1998, 2001 and 2008. This reduced credit union members’ appetites for term share certificates.
- Second, three rounds of COVID-19 stimulus checks swelled members’ checking account balances.
- Third, the pandemic led to a record surge in the national savings rate and therefore a record level of credit union members’ liquid savings.
CUNA Mutual Group also reported that, even though market interest rates are expected to rise in 2022, it is forecasting credit union yield-on-asset ratios to fall to a record low 2.70 percentage points.
The report also stated that the credit union average loan-to-savings ratio fell to 70.3% in September, down from 76.3% in September 2020, due to deposit growth exceeding loan growth.
The report also found that:
- credit union loan balances rose 0.5% in September, slower than the 0.6% pace reported in September 2020;
- based on current trends, credit union lending growth is expected to rise 9% in 2022 while savings balances increase only 5%;
- credit union consumer installment credit loan balances (auto, credit card and other unsecured loans) rose 0.8% in September, faster than the 0.5% rise set in September 2020;
- outstanding consumer credit for all lenders rose a strong $30.4 billion, with balances up 5.1% over the last year;
- vehicle sales fell to a 12.22 million unit seasonally-adjusted annualized sales rate, down from 13.09 million in August, while total light-vehicle sales were 25.2% below those of September 2020;
- credit union fixed-rate first mortgage loan balances grew 0.8%, below the 1.7% pace set in September 2020 due to the slowdown in the mortgage refinance boom;
- the credit union system’s capital-to-asset ratio fell to 10.1%, down from 10.5% in September 2020 due to a surge in deposits and assets compared to the increase in capital; and
- credit unions added more than 3.7 million memberships in the first nine months of 2021, significantly above the 3.4 million added in a similar period of 2020.
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.
For additional analysis on the November CUNA Mutual Group Trends Report, visit the New York’s State of Mind blog, written by Henry Meier, the New York Credit Union Association’s SVP/general counsel.