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Local credit union snapshots reveals unique pandemic environment

Second quarter 2020 year-over-year trends (annualized as of June 30, 2020)

ONTARIO, CA (September 23, 2020) — An abundance of new lending in credit union mortgages to households and business loans to businesses is being met with an even higher level of incoming deposits by consumers in general, according to second quarter 2020 California data (CLICK HERE) and Nevada data (CLICK HERE) extracted from broader highlight trends compiled by the California and Nevada Credit Union Leagues.

It means several consumers, taken in aggregate, are borrowing and saving at record high levels using their 306 locally headquartered credit unions in many regions across both states as COVID-19 inflicted economic pain on households and businesses (291 credit unions in California and 15 in Nevada). But why?

The Leagues explain in the following synopsis what’s happening within local California and Nevada borrower and household financial spending/savings trends amid the COVID-19 economy:

CA and NV Highlight Trends: Members, Loans, Deposits

Credit union membership in California and Nevada was already hitting new records coming out of late 2019 and early 2020. The second quarter of 2020 revealed that:

  • This membership trend, driven by “new” consumers choosing credit unions to be their financial services provider and existing members becoming new members of additional credit unions, did not stop.
  • Homeowners and vehicle owners looking to refinance their loans as interest rates plummeted nearly overnight aided the inflow of some consumers becoming new members, as well as emergency loans offered throughout the pandemic.
  • Small business owners scrambling for Paycheck Protection Program (PPP) forgivable loans issued by the U.S. Small Business Administration and the Treasury Department also played a role in new membership.

Total credit union loans in California and Nevada, having already reached record territory for several quarters on end, were starting to taper off coming out of late 2019 and early 2020 as the economy entered its late stages of record growth with extremely low unemployment. The second quarter of 2020 showed:

  • First mortgages of all types (fixed rate, adjustable, etc.) were the main sub-drivers of the much larger total/headline loan growth as mortgage rates plummeted and homeowners refinanced into new mortgages with lower interest rates.
  • Business loan growth (includes landlord real estate loans) in many regions helped as Paycheck Protection Program (PPP) loans were facilitated to local business owners seeking payroll/employee cost relief.
  • The fact that used auto loan growth either held steady or did not decline as much as other loan categories (depending on the region) also helped bolster or buffer total/headline lending trends. Used vehicle prices relative to new autos, combined with very low-interest rates, are making pre-owned cars and trucks relatively much more attractive during the economic slowdown.
  • Three loan categories declined significantly as the pandemic-forced government shutdown halted economic activity: new autos, credit cards, and HELOC/home equity loans (combined category).

Total credit union deposits in California and Nevada were already hitting record highs for many consecutive quarters coming out of late 2019 and early 2020 due to new members joining credit unions (not from consumers increasing their savings). The second quarter of 2020 demonstrated that:

  • Checking and savings accounts mostly saw the highest growth rates.
  • This increase in consumer deposits came from: less spending and more savings by many members; delayed IRS tax payments for some (due to a federal payment deadline extension into July); federal monies received by workers who were suddenly unemployed and qualified for additional emergency pandemic unemployment insurance; and households that received stimulus transfers/checks by Congress.

About California and Nevada Credit Union Leagues

Headquartered in Ontario, California, the Leagues exist to help credit unions change people’s lives by supporting their operations, guidance, strategy and philosophy. Our trade association helps local credit unions in California serve more than 13.5 million members and those in Nevada serve nearly 400,000 members. Credit unions are for people, not profit!

Contacts

Karla Davis
Vice President of Communications and Marketing
California and Nevada Credit Union Leagues
karlad@ccul.org

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