The economy proved to be resilient in the second quarter despite a number of headwinds. GDP increased 3.0%; however, under the surface, consumer spending and business investment slowed. Meanwhile, businesses have taken a wait-and-see approach to hiring. But at America’s credit unions? Things are chugging along as cooperatives remain remarkably consistent with respect to their member-driven missions.
Takeaway 1: Member Growth Lags Prior Quarters
MEMBER GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates
- Credit union member growth slowed to 2.0% in the second quarter. After pumping the brakes on indirect channels, credit unions are redirecting limited resources to attract members organically. As such, member growth has dipped to a level not recorded in more than a decade.
- Credit unions have pulled back from indirect lending, which shrunk 1.2% year-over-year. It comprised just 20.2% of the loan portfolio at midyear, down from a high of 22.4% two years ago.
Key Takeaway 2: Member Growth Is Weak In Pockets
CREDIT UNION MEMBER GROWTH BY STATE
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates
- Slowing member growth was not as weak across the nation as it was in select regions. The Midwestern Rust Belt states of Ohio, Indiana, and West Virginia reported weaker membership growth.
- Meanwhile, the South is uneven, with states like South Carolina and Alabama losing membership even as states like Florida and Tennessee added them. The West was also particularly strong. Utah, Oregon, Idaho, and California all reported above-average membership growth.
Trendwatch 2Q25. Explore second quarter performance trends and learn about their impact on the industry today with Callahan & Associates. Callahan hosts and industry guest presenters highlight where credit unions are excelling, where challenges are emerging, and how peers are responding. Don’t wait to gain key benchmarks, strategic takeaways, and insights to navigate the rest of 2025. Watch today.
Takeaway 3: Core Members Are Deepening Relationships
AVERAGE MEMBER RELATIONSHIP
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates
-
- Core members have gradually brought more to their credit union relationship, especially in shares. During the past calendar year, members increased their average balances $435, or 3.2%.
- Second quarter data, however, tells a story about member relationships and loans. Although the average share balance fell $24 in the past three months, the average loan balance jumped $134. Notably, mortgages grew 25.5% year-over-year and credit unions originated more this quarter than any since the third quarter of 2022.
Takeaway 4: Share Growth Trends Reflect New Needs
SHARE GROWTH AND PERSONAL SAVINGS RATE
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates
- The personal savings rate picked up again in the second quarter. At 4.5%, it was the highest savings rate in the U.S. economy in a year. Meanwhile, credit union members have socked away shares in their cooperative at a rate not recorded since the third quarter of 2022.
- Increased savings is a positive attribute of personal finance; however, it portends a shaky time for the U.S. economy. Facing a weakening job market and increasing anxiety levels, a savings cushion should help members weather any potential headwinds.
Takeaway 5: Income Grows As Expenses Stay Flat
NET INTEREST MARGIN VS. OPERATING EXPENSE RATIO
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates
- Credit union margins in the second quarter jumped mightily and hit 3.32% on net. Why? Interest income increased to 5.15% of average assets yet interest expenses stayed roughly the same — 1.83%. Cost of funds also was relatively calm. That stood at 2.06% in the second quarter.
- At the same time, operating expenses continued the steady climb of the past three years. As a result, return on assets increased 8 basis points quarter-over-quarter to land at 0.75%.
Let’s Review Your Credit Union Performance Data Together. Join a Callahan consultant for a complimentary 1:1 session to analyze your performance reports. We’ll benchmark your credit union against two to three peer groups of your choice and provide a detailed report of our findings at the end of the session to help your team make informed strategic decisions. Request your free session today.
See You Next Quarter! CreditUnions.com updates this page with the freshest FirstLook credit union performance data every quarter, so don’t forget to come back for performance insights into the third quarter of 2025.