A Year In Review And What Lies Ahead For Credit Unions In 2025

Credit unions continue to navigate an evolving financial landscape. Liquidity pressures have eased and deposit growth has stabilized; now, credit unions are adjusting to changing member needs, competitive pressures, and economic fluctuations. When it comes to credit union financial performance, the industry’s ability to balance business strengths with mission-driven service remains critical. So, too, is refining strategies to foster deeper relationships with members and maintain sustainable growth.

Deposit Growth: Signs Of Stability

Credit union leaders have focused heavily on liquidity and deposit growth the past several years. Lagging share growth made for a challenging environment in 2023; however, that trend reversed course in 2024. Credit unions reported a 4.3% increase in share balances for the year, more than twice the pace of 2023. Although certificates remained a crucial driver of growth, core deposits — such as money market and share draft accounts — began to rebound.

This shift suggests credit unions are not only effectively competing for deposits but also benefitting from an improved savings rate among members. A decline in short-term borrowings further heralded the return to more balanced liquidity conditions, signaling a more stable funding base.

YEAR-OVER-YEAR SHARE GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

Some credit unions are taking innovative approaches to differentiate deposit products. For example, a checking account from Langley Credit Union ($5.4B, Newport New, VA) allows members to select options based on usage patterns and financial goals, reinforcing engagement while maintaining financial stability.

Lending: Strategic Shift In Focus

Loan growth in 2024 slowed compared to prior years, particularly in consumer lending. Auto loan balances declined as credit unions competed against aggressive manufacturer financing offers and many intentionally pivoted away from indirect lending. These credit unions have instead focused on deepening relationships with existing members, aligning lending strategies with long-term sustainability rather than volume-based growth.

Despite the decline in consumer lending, real estate loans — especially home equity products — showed strong growth. This is especially notable given the lack of housing and inflated prices across the United States. Heritage Family Credit Union ($772.9M, Rutland, VT) is stepping up efforts to support affordable housing by partnering with local government and leveraging its not-for-profit model. Efforts like this underscore the critical role credit unions play in addressing housing challenges.

YEAR-OVER-YEAR LOAN GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

Another notable shift occurred in commercial lending. As some credit unions expanded their business loan portfolios, others made the strategic decision to refocus. University Federal Credit Union ($4.0B, Austin, TX), for example, made the bold decision to exit its commercial lending and insurance services businesses. CEO Michael Crowell described the move as a way to sharpen UFCU’s impact on consumer banking — allowing the institution to be great at what it does best rather than spreading resources too thinly.

Great Strategy Requires Trade-Offs. Hear from UFCU CEO Michael Crowell as he talks with Callahan & Associates about the cooperative’s decision to exit commercial lending and insurance services. Watch today.

Asset Quality: A Watchful Eye On Financial Health

Although the U.S. consumer balance sheet remains strong on average, some members are struggling. Delinquencies and charge-offs have risen across nearly every loan category, surpassing pre-pandemic levels. Inflationary pressures on household expenses — ranging from groceries to utilities — have stretched budgets and compounded financial distress.

Credit unions, however, are responding with risk management strategies as well as proactive support. At Suncoast Credit Union ($17.8B, Tampa, FL), a micro-business lending initiative provides financial education alongside capital access. By focusing on long-term financial health, credit unions continue to differentiate themselves from traditional lenders.

ASSET QUALITY
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

The Role Of Credit Unions In An Evolving Economy

Retaining healthy balance sheets and growth metrics in a difficult economic environment hasn’t prevented credit unions from playing a vital role in their communities. In fact, their cooperative model positions them to provide financial stability in uncertain times. From micro-branches serving remote communities to resource centers connecting local nonprofits with individuals in need, credit unions remain deeply mission-driven.

The challenge ahead lies in balancing financial strength with broader service. With strong capital positions and resilient business models, credit unions have the flexibility to invest in their future — whether through technology, branch expansion, or new products.

Looking To 2025 And Beyond

Credit unions are posting steady growth but must remember growth is not the ultimate measure of success. Growth is the inevitable outcome of achieving goals based on the right strategic focus. Not coincidentally, the right strategic focus also helps credit unions deliver lasting, positive impact in addition to sustainable growth.

To guide the next chapter of cooperative success, credit unions are deepening member relationships, refining business models, and building community prosperity. Credit unions are built to weather uncertainty — it’s in their design. By maintaining a clear sense of purpose and embracing change with intention, the industry is well-positioned to serve the financial needs of members today and for generations to come.