Credit unions set loan growth record, deposits decline in Q2

U.S. credit unions easily set a 15-year loan growth record in the second quarter based on growth in several different categories, according to S&P Global Market Intelligence data.

Industry balance sheet changes

Total loans and leases across the industry reached nearly $1.4 trillion at June 30, representing a quarter-over-quarter change of 6.3%, by far the strongest mark since the first quarter of 2007. The median change over that span is 1.7%. The previous 15-year high was set in the first quarter of 2022 at 3.6%.

Credit unions fueled the record growth with multiple loan types. First-lien one- to four-family loans accounted for $25.93 billion of the $83.21 billion quarterly increase. Home equity lines of credit surged $8.82 billion, or 11.2%. New vehicle loans were up $11.38 billion, increasing for the fifth consecutive quarter, while used vehicle loans rose for the 45th consecutive quarter with an increase of $17.33 billion. Unsecured loans including credit cards were up $6.72 billion.

In contrast to the record-breaking loan growth, deposits declined for the first time since the third quarter of 2014. The industry aggregate for shares and deposits was $1.870 trillion, down 0.1% quarter over quarter. Growth in the previous nine quarters had ranged from 1.2% to 8.3%.

Top 20 credit unions

Many of the largest credit unions reported strong loan growth along with declines in deposits and liquid assets (cash and cash equivalents plus investments maturing in one year or less). Vienna, Va.-based Navy FCU, which was three times larger than any other credit union by total assets at June 30, helped set the industry trend, with loans up 4.6%, deposits down 0.1% and liquid assets falling 17.9%.

Three of the outliers among the 20 largest credit unions by total assets were Chicago-based Alliant CU; Marlborough, Mass.-based Digital FCU; and San Antonio-based Security Service FCU. Alliant had the highest loan growth at 14.4%, Digital had the best deposit growth at 9.3%, and Security Service more than tripled its liquid assets.

Liquid assets

Credit unions accelerated their move away from a "risk-off" strategy in the second quarter. Liquid assets fell for the fifth straight quarter to $279.51 billion, down 19.8% quarter over quarter and 30.6% from the peak at March 31, 2021. The liquid assets-to-total assets ratio fell below 13%, coming down almost to second-half 2019 levels.

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