Industry Performance: Macro (4Q21)

The global economy was rebounding at the end of 2021. So, too, were U.S. credit unions. But tensions in Europe and increasingly high inflation projections suggest significant headwinds for 2022.

 

 

The consumer optimism of the second and third quarters of 2021 sobered slightly by year-end amid fears of a spike in the COVID-19 Omicron variant. Inflation surged, reaching its highest level in several decades. Federal Reserve chair Jerome Powell reversed his previous “transitory” declarations, and the FOMC discussed multiple rate hikes in the coming months. The Great Resignation created labor shortages in many economic sectors, cramping an already-hampered supply chain.

With the new year came new uncertainties, including war tensions in Eastern Europe and increasingly high inflation projections. The jury is still out on just how deeply these dynamics will affect the global economy and the people within it, but most forecasts project significant headwinds for international trade.

Still, not all news is bad. Omicron, although more infectious, proved less fatal; unemployment is down; and wages are up. Order backlogs are slowly recovering, inventories are growing, and GDP reached new highs.

Key Points

  • Assets at U.S. credit unions reached nearly $2.1 trillion at the end of the fourth quarter, up 11.7% across 2021.
  • Total share balances expanded 12.7% annually, as the cessation of major government relief slowed deposit growth.
  • Outstanding loan growth outpaced share growth 2.7% to 2.3% on a quarterly basis over the fourth quarter as consumer spending picked up for the holidays and loan repayment slowed. This increased the industry’s loan-to-share ratio by 25 basis points to 70.1% over the same period.
  • Credit unions added 5.3 million new members in 2021. With both loans and shares up, the average member relationship increased 6.0% annually to $22,543.
  • There were 48 credit union mergers in the fourth quarter. The industry consolidated through 159 mergers in the 2021, the most in a calendar year since 2018.


The Bottom Line

The global economy is rebounding; so, too, are U.S. credit unions. Member deposit accounts continue to grow, but the high rate of share inundation present throughout the pandemic is beginning to taper.

Cooperatives recorded all-time highs for loan generation. Mortgages remained strong, and credit card lending returned to seasonal patterns. However, new capitalization requirements introduced by the NCUA will require many credit unions to navigate new regulatory waters while keeping members’ needs at the forefront.


 

Read the full analysis or skip to the section you want to read by clicking on the links below.

AUTO

EARNINGS

HUMAN CAPITAL

INVESTMENTS

LOANS

MACRO

MEMBER RELATIONSHIPS

MORTGAGES

SHARES

 

 

 

 

March 21, 2022


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