23 million loans show contribution of member-owner financial model

Credit unions post growth in consumer lending while banks remain stagnant.

by: Drew Grossman

Credit unions and banks reported loan growth this quarter, but while the credit union increase was anchored by consumer lending, banks grew loans primarily with high net-worth clients.

Earlier this week, CNBC’s Kayla Tausche reported that although bank loan balances are up this quarter, consumer lending remains flat. Investors are interested in seeing loan volumes rise because it is a sign the economy is improving. Loan growth indicates people are more financially stable, their debt is under control, and they’re making big purchases. But bank loan growth, according to CNBC, is not from consumer-facing banks, it’s largely from high net-worth clients at bank brokerages. Some major banks reported modest loan growth (single-digit percentages) in the second quarter of 2014, but growth was primarily in asset and wealth management, not consumer lending.

Consumer lending at Bank of America is down 3.5% from last year, JPMorgan is stagnant from last quarter, and it’s a similar story at most other major banks, according to CNBC.

Credit union consumer lending, however, tells a different story. Financial cooperatives have increased the number and dollar amount of consumer loans every year since the recession.

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