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Perspectives on the Credit Union Market

Credit Union Performance Metrics

Q2 was encouraging for credit unions in a number of categories. Originations soared with 36.3% YoY growth; perhaps unsurprising given the state of the nation one year ago in Q2 2020. Balances also saw growth, now above $1.16T. The 4.4% YoY growth can be attributed to strong performance in installment loan products and a slowing in revolving loan balance runoff. Delinquency and charge-offs are at record low rates across financial services, with credit unions leading the way across many product types. Lastly, credit unions saw over 4% growth in new members, an encouraging sign after consecutive quarters of slowing growth. There are 128.3 million credit union members in the USA as of Q2.

Summary of Credit Union Performance Metrics

Source: TransUnion US consumer credit database
† - Originations measured in number of new accounts; Q4 2020
‡ - 60 days past due or greater, number of accounts
± - Sourced from Callahan & Associates

1) Younger borrowers drove Q2 auto balance increases, while banks and other lenders eclipsed credit union auto growth

Millennials and Gen Z drove auto loan growth in Q2, adding $42.5B and $29.9B in balances YoY, respectively. Credit unions have fallen behind their competition in balance growth, and non-credit union originations surged past credit union originations for the first time in two years. FinTechs and other new market entrants have created a more competitive landscape in auto lending, specifically appealing to younger consumers. Credit unions are implementing more automation and prequalification options in an attempt to keep pace with changing consumer expectations. Auto refinance campaigns have also proven to be an effective tool in generating auto loans outside of the traditional indirect lending channels.

FS-21-F85605 - CU CFI Quarterly Market Perspective - Desktop Inline graphics (787x325)

Source: TransUnion US consumer credit database

2) Upward credit score migration slows; lenders adjust acquisition strategies

Score migration has leveled off as accommodations expire and consumer spending returns to pre-pandemic levels. Savvy lenders have leveraged insights, such as trended credit data, to provide added confidence to their acquisition strategies. Credit union balances continue to be overly concentrated with financially healthy consumers. Sixty-seven percent of credit union balances are with consumers who have a prime plus or above credit score. Leveraging trended data insights, such as credit utilization over time, can help lenders identify pockets of opportunity in the communities they serve — without adding unnecessary risk.

FS-21-F85605 - CU CFI Quarterly Market Perspective - Desktop Inline graphics (787x325)

Source: TransUnion PramaSM Market Insights
*Totals may not equal 100 due to rounding
VantageScore® 4.0 risk ranges
Subprime = 300–600; Near prime = 601-660; Prime = 661-720; Prime plus = 721-780; Super prime = 781-850

3) Changing market dynamics driving demand for better understanding of bank and credit union markets, portfolios

Banks and credit unions are leveraging analytics to uncover blind spots on consumer wallets, competitive market dynamics and existing portfolio demographics. At TransUnion, our demand for analytics engagements by community banks and credit unions has increased more than 15% over record demand set in 2020. This is driven largely by a more competitive loan growth market and an influx of deposits, causing many banks and credit unions to recalibrate their growth strategies.

Share of wallet, market share and member segmentation studies can provide valuable baselines for credit union leaders to inform strategy and set goals. As the credit union industry strives to be more inclusive, understanding the demographics of the communities they serve has become essential.

If you’re a consumer with questions or issues related to your personal credit report, drivers history report, disputes, fraud, identity theft, credit report freeze or credit monitoring services, please visit our Customer Support Center for assistance.

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