Keystone Co-Ops Lend Well To End The Year Well

Pennsylvania credit unions exceeded the national average in loan growth while keeping delinquencies below average.

Pennsylvania credit unions originated more loans and reported fewer delinquencies than the national average in the past year. The state’s loan portfolio now totals a record $32.7 billion; however, the loan-to-share ratio for credit unions there is lower than the U.S. average 78.8% versus 85.5%, respectively.

LOAN-TO-SHARE RATIO

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.18
Callahan & Associates | CreditUnions.com

The loan-to-share ratio at Pennsylvania credit unions has increased steadily since 2014, but credit unions there are less loaned out than credit unions nationally and the state’s banks.

According to a report from Callahan & Associates commissioned by the Pennsylvania Credit Union Association, cooperatives in the Keystone State posted positive results in all major measures. Of note, loan growth for the state’s 368 credit unions exceeded the national average

ANNUAL LOAN GROWTH

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.18
Callahan & Associates | CreditUnions.com

Loan growth at Pennsylvania credit unions was 9.2% in the fourth quarter of 2018, down 42 basis points from the year prior and just ahead of the 9.0% posted by all U.S. credit unions. Both groups outperformed banks in Pennsylvania, for which the growth rate dropped 5 percentage points to 3.9%.

Total interest income and non-interest income expanded 13.9% and 12.7%, respectively, among Pennsylvania credit unions. Rising interest rates for loans and investments helped that expansion even the states credit unions, like those across the U.S., shed investments to help fund lending.

An 11-basis-point drop in delinquency from last year-end demonstrates Keystone State credit unions have a handle on the lending dynamics in their market. The rate of 0.64% as of Dec. 31 was the fourth-lowest rate on record and 7 basis points below the national average.

Credit unions in Pennsylvania reported the lowest delinquency rate, 0.28%, in new auto loans. The delinquency rate for used auto loans was 0.56%. Both were below the national average. Elsewhere in the portfolio, first mortgage delinquencies were down 5 basis points to 0.66%; however, that’s still 11 basis points more than the national average. Other real estate delinquencies dropped the most in 2018 and were down 11 basis points to 0.61%.

Perhaps most notable, credit card delinquency for the state’s credit unions fell 8 basis points annually to 0.90%. It has been below 1.0% since March 2011. The national average for all 5,492 credit unions at year-end was 1.35%

DELINQUENCY BY LOAN TYPE

FOR PENNSYLVANIA CREDIT UNIONS | DATA AS OF 12.31.18
Callahan & Associates | CreditUnions.com

Despite decreasing 44 basis points year-over-year to 1.51%, the delinquency rate for credit unions in Pennsylvania with assets less than $35 million was still higher than any other asset group. Credit unions with assets between $250 million and $500 million reported the lowest rate in the fourth quarter, 0.44%.

Eighteen credit unions were merged or acquired in Pennsylvania in 2018. Despite a drop in the number of cooperatives, the number of members grew by 144,174. Total credit union membership for Pennsylvania was just under 4.2 million at year-end in a state that has 12.81 million residents, according to data from the U.S. Census.

Credit union membership growth has accelerated in the past few years for Pennsylvania as well as for regional peer states Ohio, New York, New Jersey, and Maryland. With growth rates of 3.6% and 3.8%, respectively, all were inching closer to the national growth rate of 4.4% at year-end.

MEMBER GROWTH RATES

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.18
Callahan & Associates | CreditUnions.com

Nearly 5 million new members joined America’s credit unions in 2018, including 114,174 at Pennsylvania-based credit union members.

Rising interest rates have not stymied loan demand, nationally or in Pennsylvania. But Keystone State credit unions have navigated that expanding loan dynamic particularly well, posting growth and delinquency performance metrics that exceed industry averages. That’s a formula for providing member value now and institutional resilience for the next downturn.

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April 12, 2019

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