When the NCUA released its fourth quarter 2025 performance data, the headlines practically wrote themselves.
Total assets in federally insured credit unions climbed $126 billion over the year, reaching $2.43 trillion. Total loans outstanding increased $76 billion to hit $1.72 trillion. By any measure, these are strong numbers; the kind that make for reassuring board presentations and confident annual reports.
But aggregate numbers like these have a way of flattering the industry’s biggest players while quietly obscuring the experience of everyone else. And for small to midsize credit unions, the experience of 2025 lies beneath the flashy headlines.
The Real Story
The NCUA’s own data tells a more complicated story when you shift from aggregate totals to median performance, which is a more accurate reflection of the typical credit union, not the large institutions that pull averages upward.
At the median, loans outstanding declined 0.2% over the year ending in the second quarter of 2025. The year prior, this same figure had grown 2.4%. To me, this reads more like a meaningful reversal and less like a subtle shift. Additionally, loan balances declined at the median in 25 states and the District of Columbia during that period. By the third quarter, the median had barely recovered, registering just 0.3% growth, with loans still declining in 19 states.
Auto loans — a foundational product for credit unions of every size — told an even bleaker story. Systemwide, auto loan balances fell $10.4 billion in the first quarter of 2025, another $6.5 billion in the second quarter, and $3.4 billion more in the third. The loan-to-share ratio, a reliable barometer of lending momentum, slid from 84.0% to 83.2% over the course of the year, a signal that deposits were either growing faster than loan demand or that loan demand was being suppressed.
For a smaller credit union serving a regional community, numbers like these show up in month-end reports, in budget conversations, and in the anxiety of knowing your loan portfolio isn’t growing the way it needs to.
The Headwinds Are Getting Stronger
The lending slowdown of 2025 didn’t happen in a vacuum, and unfortunately, it appears the forces behind it are intensifying.
Elevated interest rates throughout much of 2025 kept borrowing costs high and dampened consumer appetite for new debt. This was particularly true in auto loans, where monthly payments climbed to levels that stretched household budgets.
The resumption of student loan repayments redirected some income that may have otherwise supported borrowing. On top of that, rising delinquency rates signaled that many members were already managing more debt than was comfortable.
And now, in early 2026, a new layer of pressure has arrived. Fuel prices have spiked sharply, up nearly 80 cents per gallon in recent weeks amid geopolitical disruption in the Middle East. For the small business owner running a delivery route, the contractor fueling a work truck, and the farmer getting product to market, the math got a lot harder almost overnight.
These are, in many cases, credit union members. And they’re going to need somewhere to turn.
The economic headwinds hitting communities right now aren’t theoretical. They’re showing up at gas stations, in business checking accounts, and at kitchen tables.
3 Ways To Go On Offense
But here’s the thing: The institutions that will come out of this period with stronger loan portfolios and deeper member loyalty are the ones choosing right now to be proactive, visible, and useful. Here’s where to start:
1. Eliminate Friction Between Your Member And A “Yes”
When a member needs money to cover a bill, buy groceries, or handle an unexpected expense, the credit union that makes it easiest to get there wins. It’s that simple.
That means taking a hard look at your current lending process and asking a question with a potentially eye-opening answer: how many steps stand between a member and funded loan?
If the answer involves a branch visit, a lengthy paper application, or a multi-day wait for a decision on a loan they almost certainly qualify for, then you’re creating an opening for a competitor to walk right through.
The most effective credit unions right now are delivering pre-approved loan offers directly through online and mobile banking. These are offers members can accept in a single step, with e-signature handling the closing instantly. No friction. No waiting. No reason to look elsewhere. Don’t think of this as merely an opportunity to upgrade member experience. We’re talking about bolstering your entire loan growth strategy.
2. Use What Your Core Already Knows
Your data is one of your most underutilized assets. Every transaction, every payment history, every account relationship your members have with your credit union is a signal. And when you read those signals intelligently, you stop guessing and start strategizing.
The credit unions gaining ground on loan growth right now aren’t blasting generic offers to their entire membership. They identify the right members (i.e., the ones most likely to need and qualify for a specific product) and reach them with an offer or solution that feels relevant instead of random.
They’re also leaning on relationship history as part of the lending decision itself. A member with years of timely payments, steady deposits, and deep roots in your credit union tells a story that a credit score alone can’t fully capture. Use that story. In fact, your core should make that kind of insight easy to access and act on. If it isn’t, then it may be time to have a conversation.
A potential member who doesn’t know you offer small business loans or doesn’t realize your rates beat the bank down the street has no reason to walk through your door when they need help.
3. Be Loud And Proud In Your Community
Unfortunately, credit unions have to constantly fight an awareness battle that banks simply don’t have to. A potential member who doesn’t know you offer small business loans or doesn’t realize your rates beat the bank down the street has no reason to walk through your door when they need help.
But have no fear, this is an entirely fixable situation.
Right now, with small businesses facing rising fuel costs and tightening margins, there is a genuine, urgent opportunity for credit unions to raise their hands and be heard. Feature your small business loan products. Talk openly about lower rates, fewer fees, and the kind of personalized service a regional bank or national lender structurally cannot provide.
Run a local TV spot featuring a member success story that you helped create. I’m talking about the restaurant that stayed open during an economic downturn, the contractor who bought a second truck, or the mom-and-pop retailer fighting back against a regional competitor. Put your rates on social media. Be specific. Be local. Be loud.
The community you serve is looking for a partner right now, not a transaction. Credit unions are built to be that partner. But they have to show up for people to know it.
The credit union model was designed for exactly this kind of moment, and CU*SOUTH is built to help your credit union make the most of it. We power credit unions across America with a browser-based, all-in-one core loaded with data and analytics, relationship-driven capabilities, and streamlined lending tools — including 1-Click Loans, which puts pre-approved offers directly in members’ hands through online and mobile banking.
Danny Phillips is senior vice president of client experience at CU*SOUTH. He has more than 20 years of credit union experience and expertise in lending, risk analysis, underwriting, and team development. With a track record of creating new loan products, building departments from the ground up, and optimizing operations across lending, compliance, and marketing, Danny is dedicated to driving growth and enhancing client experience at CU*SOUTH.
As a 100% credit union-owned CUSO, CU*SOUTH provides the full operational engine for credit unions nationwide. The organization delivers a modern, browser-based core platform seamlessly integrated with back-office essential services — accounting and CFO services, IT and collections — managed by experienced credit union veterans.