3 Takeaways From Trendwatch 2Q 2018

Loans, liquidity, and credit union love. How did credit unions perform in the second quarter?

 
 

Growth in members, market share, and revenue highlight credit union performance at midyear 2018.

This week, Callahan hosted its Trendwatch webinar, a quarterly event that recaps the industry’s performance trends while highlighting credit union success stories and other areas of opportunity.

Here are three Trendwatch takeaways for the second quarter of 2018:

 

 

No. 1: The Loan Portfolio Hits $1 Trillion

At second quarter, the credit union industry's 9.8% loan growth has led the portfolio to surpass $1 trillion for the first time. Loan growth has slowed in the last year, however, 2018 has seen the highest year-to-date loan origination on record, at $255.9 billion.

A full year ago, credit union loan growth hit 10.8%, buoyed by stronger new and used auto loan growth rates when compared to the current quarter. Part of the slowing auto loan growth can be attributed to decelerating indirect growth — down 4.3 percentage points year-over-year, to 16.2% . Indirect loans now make up 60.0% of the auto loan portfolio.

AUTO LOAN GROWTH RATES

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18
© Callahan & Associates | www.creditunions.com
Quarter New Auto Loan Growth Used Auto Loan Growth
2Q17 16.3% 11.9%
2Q18 11.8% 10.0%

Source: Callahan & Associates.

2017 Callahan & Associates, Inc. All rights reserved

Beyond the auto loan portfolio, credit unions are finding greater success in first mortgages and credit cards. Year-over-year, first mortgages grew 10.6%, while credit cards grew 9.1%. The industry now holds 8.7% first mortgage market share and 5.8% credit card market share, up 50 and 30 basis points respectively from one year ago.

How Do You Compare?

These are just three takeaways from Trendwatch 2Q 2018. If you'd like to learn more, including how your member growth, marketing expense, and average member relationship compares to local and national peers, Peer-to-Peer can help. Request a complimentary audit today and a member of our team will walk you through the data.

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No. 2: Liquidity Management Takes Center Stage

The credit union loan-to-share ratio at second quarter, 82.9%, is the industry's highest since year-end 2008. Consumer confidence remains high, with loans growing at a faster rate than deposits. As a result, credit unions are more loaned out and are looking for additional instruments to manage liquidity.

For one, credit unions are drawing down investment portfolios. As of June 2018, the industry's investment portfolio decreased by 3.9% year-over-year. In addition, credit unions are increasingly finding share certificates an attractive way to fund loan volume. Up 7.2% year-over-year, share certificates at credit unions have grown $15 billion in the past 12 months alone.

On the lending side, the industry's participations sold continues to climb, to $5.1 billion, which represents 8.0% growth year-over-year. And that's not all. Rate-sensitive mortgage products — balloon and adjustable-rate products — have grown as a share of the loan portfolio, as credit unions work to better position themselves as rates rise.

No. 3: More Members. More Usage.

The industry counts 115.5 million members at second quarter, as total memberships grew 4.4% year-over-year. This is the fifth consecutive quarter of accelerating annual member growth.

The previous three months have also set the record for the most net new members added by the credit union industry. 1.4 million new members found not-for-profit financial cooperatives an attractive banking partner in the second quarter of 2018.

Usage has grown, as well. At second quarter, the industry's average member relationship of $18,682 represents a 2.9% growth rate year-over-year, from $18,150. This growth was primarily driven by an uptick in the average loan balance per member, which moved from $7,751 to $8,186 year-over-year.

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Aug. 22, 2018


Comments

 
 
 
  • For our own comparison, please advise on what the average member relationship amount includes? Thanks.
    Yean-Ai
     
     
     
  • Thanks for your question! Here we used an average member relationship that excludes business loan balances. Our formula: total loans outstanding + total share balances - MBL balances/ current members.
    Erik Payne