US federal credit unions sector outperforms banks

Credit unions continue to expand their lending to small businesses while banks’ small business lending is stagnant

Federally insured credit unions in the US have been enjoying stronger loan growth and lending performance than traditional banks.

According to sector body Nafcu‘s fourth-quarter CU Industry Trends report, credit unions also continue to expand their lending to small businesses (from 10% to 12%) while banks’ small business lending is stagnant.

The data confirms that credit unions originate over 8% of total first mortgage loans. They are also holding more long-term real estate loans, while reducing their holdings of long-term investments.

The report mentions key trends based on data from regulator National Credit Union Administration, both at the industry level and broken down by region, state and asset class.

NCUA data published in March showed that 88% of federally insured credit unions had reported positive net income during 2018. Furthermore, median annual loan growth in the year ending in the fourth quarter was 5.9% and median annual asset growth was 1.7%. Membership exceeded 116 million while assets grew 5.4%, year over year.

“Credit unions’ commitment to serving their members is reflected in their strong growth,” said Nafcu chief economist and vice president of research Curt Long. “Due to their prudent management, credit unions remain competitive in the midst of a rising rate environment.”

Nafcu’s report revealed that credit union loan delinquencies had gone down down in every region compared to a year ago.