For years, credit union membership growth was one of the clearest signals of the movement’s strength. That momentum is beginning to shift.

Annual membership growth in the first quarter slowed to 1.81%; that’s one of the weakest levels in years. Some institutions even reported quarterly declines. Perhaps counterintuitively, though, this isn’t a story of disengagement. Consumers are still borrowing, saving, and opening accounts. What’s changed is how they build relationships.

Consumers are increasingly spreading their financial activity across multiple providers, making it harder for credit unions to capture primary relationships. At the same time, credit unions are pulling back from traditional acquisition channels like indirect auto lending, further reducing membership inflow.

Yet the industry is still growing. Loan and share growth remain relatively strong, thanks not to new members but deeper relationships with existing ones. As credit unions shift from growing headcount to fattening wallet share, they must focus on achieving PFI status as much as on attracting members in the first place.

MEMBER GROWTH VS. SHARE GROWTH VS. LOAN GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.26
SOURCE: CALLAHAN & ASSOCIATES

• Membership growth in the first quarter of 2026 slowed to 1.81%, marking a steady decline from prior years.
• Loan growth has picked up after a sharp post-peak decline. It was 5.13% as of March 31, signaling steady borrowing demand.
• Share growth has normalized from elevated pandemic-era levels and has settled around 4.66%, reflecting a more typical deposit environment.
• Loans and shares are growing two to three times as fast as membership, indicating new members are no longer driving growth. Instead, the industry is shifting toward deeper relationships.

When members know you care, they stay. As financial relationships fragment across providers, the credit unions earning PFI status are building emotional trust as much as they’re competing on rates or products. Gallup research shows emotionally engaged members are 5.4 times more likely to stay and 2.5 times more likely to hold multiple products, exactly the depth of relationship credit unions need most right now. Learn more.

The post Where Have All The Members Gone? appeared first on CreditUnions.com.

No. 1: Consumers Need Support Now More Than Ever

INDEX OF CONSUMER SENTIMENT
FOR 900-1,000 MONTHLY WEB INTERVIEWS | DATA AS OF MARCH 2026
SOURCE: UNIVERSITY OF MICHIGAN SURVEYS OF CONSUMERS

• After a brief rebound in early 2024, the Index of Consumer Sentiment declined steadily throughout 2025 and into 2026. The reading of 55 in March 2026 was even lower than the peak days of the COVID pandemic and signals genuine household anxiety rather than routine fluctuation. When consumer outlook is this uncertain, households often pull back on borrowing, delay major purchases, and prioritize liquidity.
• Of course, social media and the 24-hour news cycle can skew the perception of economic health away from household reality. Indeed, certain segments of the economy are doing OK; unfortunately, others are hurting. With this context, it’s important to remember that macroeconomic data represents the average and credit unions serve those on the lower end of that economic spectrum.
• For credit unions, today’s reality is both a warning and an opportunity. Members under financial stress are more likely to need guidance, restructuring options, and financial counseling. Institutions that show up proactively — rather than waiting for delinquencies to surface — will deepen loyalty when it matters most.

Watch Trendwatch on demand today. Did you miss this quarter’s live Trendwatch webinar? No worries! Catch it on demand. Learn about first quarter performance trends from industry experts and take note of the practical insights you can act upon today to strengthen strategy, serve members better, and perpare for what comes next. Watch Trendwatch today.

No. 2: Member Growth Is Historically Low; Confounding Factors Are At Play

ANNUAL MEMBER GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Membership growth remains sluggish despite a slight uptick in the first quarter. Much of the prior-year volume came from indirect lending — a channel that’s often expensive and ill-suited to building lasting relationships. Credit unions have pulled back from indirect lending and now must find new ways to tell their story and fill their lending pipelines.
• Membership growth is diverging by asset size — smaller credit unions are posting rates as low as -0.5%, whereas larger peers hold near 1.8%. Scale plays a role, but so does an education gap: younger members increasingly don’t know what they’re missing. Smaller credit unions have the opportunity to make the case for community finance to a generation that hasn’t heard it yet.
• On the bright side, relationships with existing members are deepening. Products per member and average relationship balances are up, as are most product penetration rates. In short, fewer new members might be joining the movement, but credit unions are still heavily supporting their core member base.

No. 3: First Mortgages Are Carrying Loan Growth

YEAR-TO-DATE LOAN ORIGINATIONS
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Year-to-date loan originations hit $152.6 billion as of the first quarter of 2026; that’s a 13.6% increase from this time last year.  First mortgages have been doing the heavy lifting. As rate cuts filter through the housing market — and prices stabilize in many markets as wages partially catch up — demand for homebuying and refinancing is returning.  Credit unions with a strong mortgage infrastructure are well-positioned to capitalize on this trend, especially in the relationship-driven refinance space where credit unions historically thrive.
• Other real estate and commercial real estate categories contributed to loan growth to a lesser degree. Auto lending, which dominated origination activity in prior years, is notably absent as a growth driver — a reflection of the industry’s retreat from indirect lending, tariffs, elevated vehicle prices, tighter consumer budgets, and the continued hangover from pandemic-era buying behavior.

No. 4: Asset Quality Is Improving … Seasonally, At Least

ASSET QUALITY RATIO
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Credit unions reported the typical first quarter improvement in the asset quality ratio. Net charge-offs and delinquencies ticked down from elevated year-end levels. Delinquency ratios came in at 0.81%, whereas net charge-offs settled at 0.84%, for a combined ratio of 1.65%. These numbers are better than the fourth quarter of 2025 but remain higher than pre-pandemic norms.
• First quarter seasonality is relevant. Tax refunds, holiday debt payoffs, and January financial resets temporarily reduce delinquency. The real test will come in the second and third quarters when the buffer fades and credit unions will see if consumer sentiment reflects repayment reality. The good news? The industry remains well-covered for delinquency and has a strong net worth on average. The cushion is there to help struggling members at a time when banks or other financial institutions might turn them away.

No. 5: Now Is The Time To Build Capital And Invest Strategically

OPERATING EXPENSE RATIO VS. NET INTEREST MARGIN, ANNUALIZED
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• The gap between the net interest margin and the operating expense ratio is the widest it’s been in decades — a 0.33 percentage point spread that reflects the unusual and favorable environment credit unions have been operating in since rates began rising in 2022. For now, this margin cushion is providing real earnings flexibility.
• Even with slowing non-interest income revenue, and increasing provision expense, credit union ROA is up to 0.85% annualized. This is a relatively high return on assets, giving the industry some freedom to build allowance and net worth cushions.
• However, pressures are building from both directions. If rates ease, asset yields historically compress. Meanwhile, operating expenses rarely come down for long — technology investments, staff costs, and compliance burdens continue to climb with inflation. Credit unions that treat today’s margin environment as permanent could be caught off guard. In the meantime, the window to build capital, invest strategically, and reduce structural cost is still open. Effective investment in operational efficiency is a key way to manage expanding operating costs.

See the patterns behind this quarter’s trends. Trendwatch highlights key themes drawn from industrywide data. Peer Suite’s Premium level helps leaders evaluate their credit union’s performance across the same core metrics, using handpicked peer groups and deeper context to support understanding and discussion. Start your free 30-day trial.

See You Next Quarter! CreditUnions.com updates this page with the freshest FirstLook credit union data every quarter, so don’t forget to come back for insights into the second quarter of 2026.

The post 5 Takeaways From First Quarter Credit Union Performance Data appeared first on CreditUnions.com.

In this environment, traditional risk tools alone aren’t enough. As digital lending scales, portfolio protection must evolve to meet members within the lending experience itself.

What’s Changing In Borrower Behavior?

Economic pressures are reshaping how members approach borrowing and how confident they feel in their ability to repay. The TruStage 2025 Consumer Lending Preferences Research highlights this strain:

• Borrowers feel increasingly financially fragile.
  • 91% worry that a life event could impact their ability to make loan payments.
  • 73% have experienced at least one financial hardship.
• Repayment anxiety is becoming universal.
  • Eight in 10 consumers are worried about their ability to make their loan payment.
  • Rising inflation, income instability, and higher household debt loads are intensifying this concern.
• Demand for credit remains strong, despite stress.
  • Six in 10 Americans say the current economy makes them more willing to take out a loan for a major purchase or unexpected expense.
• Members want protection built into the lending experience.
  • 70% are more open to credit union payment protection than in prior years.
  • 96% prefer to learn about payment protection before finalizing a loan.

These shifting expectations set the stage for a thoughtful approach to mitigating risk while helping members feel supported and confident.

Why This Matters For Credit Unions

Missed payments are rarely the result of unwillingness to repay. More often, they’re triggered by short‑term disruptions — job loss, illness, injury — that affect multiple aspects of a household’s finances at once. Traditional credit indicators may not capture these real-time stressors, leaving both borrowers and lenders exposed.

Credit unions can protect members and strengthen portfolio resilience by embedding safeguards directly into the loan journey, along with continued face-to-face discussions with loan officers.

The Integrated Protection Approach

When lenders integrate payment protection in the loan workflow and include payment protection in the loan app, members gain confidence at the moments that matter.

In our research, 74% of borrowers said they expect more than one opportunity to learn about payment protection across the loan journey. With a multitouch, multichannel approach, you’re able to reach members when and how they prefer to learn about and consider this protection.

Embedded insurance for lenders is designed to help reduce delinquencies by giving borrowers a safety net, yet it avoids disrupting approvals or elongating cycle times. Think of it as portfolio resilience for lenders through a better member experience.

By presenting options seamlessly, lenders can improve conversion rates without the feel of an add-on sale.

Operationalizing It — Without Slowing The LOS

Credit unions can incorporate consumer loan protection solutions effectively by using user interface (UI) patterns that feel native to the loan origination system (LOS). Best practices include:

• Contextual prompts during pricing and terms review that explain how coverage helps mitigate loan default protection risks.
• Clear, plain‑language disclosures that build trust and support financial health protection.
• Real‑time selection and instant confirmation so protection carries through automatically.

The Leadership Opportunity

Today’s borrowers expect transparency, stability, and personalized support. By embedding payment protection insurance into your digital lending journey, you can help protect members from the financial stress they worry about most. It’s a practical way to keep credit flowing, maintain member trust and scale with confidence.

Learn how you can embed TruStage loan protection to support your members and your portfolio.

Danielle Sesko is the director of product management at TruStage. TruStage is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, WI.

The post Balancing Growth And Risk In Uncertain Lending Environments appeared first on CreditUnions.com.

Auto lending remains a cornerstone of credit union growth, but the foundation is shifting. Rising vehicle costs, record loan balances, and the rapid expansion of longer-term financing are creating a structural increase in negative equity that is reshaping both borrower behavior and portfolio risk.

Recent data confirms the scale of the shift. The average amount financed for a new vehicle reached a record $43,899 in Q1 2026 — nearly $44,000 committed to an asset that begins losing value the moment it leaves the lot¹. Monthly payments have climbed alongside that figure, and nearly one in five borrowers is now committing over $1,000 every single month just to keep a vehicle in the driveway.

When that payment is attached to a seven-year loan on a depreciating asset, it is not simply a financing decision. It is a financial trap that is becoming harder and harder to exit. These are not isolated data points. They reflect a broader change in how vehicles are being financed and what it takes for borrowers to remain in the market.

To manage rising costs, borrowers are increasingly turning to longer loan terms. Loans of 84 months or more now represent a growing share of originations, rising sharply in recent years. In some segments, particularly trucks and higher-trim SUVs, extended terms are becoming the default because they are often the only way to achieve a target monthly payment. For credit unions, this raises an important strategic question: are longer terms solving the affordability problem, or simply pushing risk further into the future?

Negative Equity Is Becoming More Common

Negative equity has long been a part of auto lending. What is changing is how persistent and widespread it has become — and how deeply its roots trace back to the pandemic.

During the pandemic, a semiconductor shortage created a severe shortage of new vehicles on dealer lots. Prices soared, and buyers, either flush with disposable income or lacking other transit options, paid up. That wave of inflated purchases is now coming back around. As those borrowers attempt to trade in, they are discovering that their vehicles are worth far less than they owe.

According to a recent Wall Street Journal analysis, about 30% of borrowers who traded in a vehicle in Q1 2026 carried negative equity, with an average shortfall of $7,200 — a 42% jump compared with the same period five years earlier⁷. Borrowers with negative equity financed an average of nearly $56,000 for a new vehicle in Q1 2026, roughly $12,000 more than the typical buyer, resulting in average monthly payments of $932 — the highest ever recorded.

The downstream consequences are significant. Consumers who rolled over negative equity from a prior vehicle loan were more than twice as likely to have their car repossessed within two years, compared with those who netted money on a trade-in, according to a 2024 study from the Consumer Financial Protection Bureau⁷. Default rates on car loans rose in March 2026 to their highest levels since 2010.

At the same time, affordability pressures are not easing. Used vehicle prices have recently increased by approximately $1,500 in a short period, adding further strain to both new and pre-owned buyers. As more consumers shift toward used vehicles to manage costs, they are encountering many of the same challenges.

The Trade-Off Behind Longer Terms

Extending loan terms has become the primary tool for maintaining affordability. It works in the short term by lowering monthly payments. However, it introduces longer-term risks for both borrowers and lenders.

Borrowers remain in negative equity positions for a longer portion of the loan. The likelihood of rolling that negative equity into the next transaction increases. Credit unions, in turn, carry exposure on depreciating collateral for extended periods.

In effect, longer terms address payment, but not financial sustainability. This creates a difficult balancing act. Without competitive payments, credit unions risk losing volume to dealerships and captive lenders. But relying solely on longer terms can increase portfolio risk and limit future lending opportunities.

A Structural Alternative To Extended Terms

Addressing affordability without compounding risk requires a different approach. Residual-based financing offers an alternative structure that changes how vehicle loans are built.

Instead of making payments on the full loan amount, monthly payments in a residual-based structure are calculated on the difference between the purchase price and a guaranteed future value set at origination. The result: lower payments without adding months to the term. At maturity, borrowers can keep the vehicle, refinance, trade, or walk away — a clean exit that breaks the negative equity cycle rather than extending it.

This shift creates several advantages. Borrowers can achieve lower monthly payments without extending terms beyond typical ranges, often 24 to 72 months. At the end of the term, they have clear options: keep the vehicle, refinance, trade, or return it and walk away from the remaining balance. Most importantly, this structure helps reduce exposure to negative equity by aligning the loan with expected vehicle value over time.

Supporting Both Member Outcomes And Portfolio Performance

For credit unions, improving affordability is not just about originating loans. It is about ensuring those loans perform over time. When borrowers are placed into payments they can realistically afford, the benefits extend beyond the individual transaction. Lower payment stress can contribute to stronger repayment behavior, improved member satisfaction, and more stable portfolio performance.

Residual based financing also provides a way to compete more effectively in a payment-driven market. Dealerships and captives continue to focus heavily on monthly payment as the primary decision factor. Without comparable options, credit unions risk losing relevance in both direct and indirect channels. By offering an alternative to extended-term financing, credit unions can maintain competitive positioning while managing risk more effectively.

Residual-based financing also delivers a meaningful yield advantage for credit unions because the loan amortizes to the guaranteed future value rather than to zero. This produces a higher effective yield compared to a conventional loan of the same term, an outcome that supports portfolio performance alongside the member benefits.

Expanding The Lending Toolkit

One of the more telling dynamics in today’s market is that many borrowers are not choosing longer loan terms because they want to. They are choosing them because they feel they have no other option. That perception presents an opportunity. Residual-based financing introduces another lever for managing affordability — one that does not rely on extending loan duration or increasing borrower risk. It allows credit unions to structure loans more strategically, balancing payment, equity position, and portfolio performance.

Looking Ahead

J.D. Power analysts have explicitly warned of a “day of reckoning” as negative equity balances and long-term loan exposure accumulate across lender portfolios. That language is striking because it signals not a gradual shift but a potential inflection point. The credit unions best positioned for what comes next will be those that moved before the pressure became acute, not those still extending terms and hoping the market stabilizes.

Negative equity is becoming more embedded in the auto finance system, driven by rising vehicle costs, higher payments, and the growing reliance on extended loan terms. Addressing this challenge requires a shift in approach.

By incorporating alternative structures such as residual-based financing, institutions can help members avoid or exit the negative equity cycle while maintaining competitive positioning and supporting long-term portfolio health.

The goal is not simply to make the next payment work. It is to ensure that each loan puts the member in a stronger position for the next financial decision.

If your credit union is still relying solely on term extension to compete on affordability, you are solving today’s payment problem while building tomorrow’s portfolio risk. Join us on May 19 to explore a different path.

Register for our live webinar, Beyond Conventional Auto Lending: The Advantages of AFG Residual-Based Financing, on May 19 at 1 p.m. CT / 2 p.m. ET, where we’ll explore how residual-based financing works and how it can help your credit union address affordability challenges, reduce negative equity exposure, and strengthen portfolio performance.

Auto Financial Group (AFG), a Houston-based company, provides an online, residual-based, walk-away vehicle financing product called AFG Balloon Lending, as well as vehicle leasing and vehicle remarketing to financial institutions across the United States. For more information about AFG, call toll free at 877-354-4234 or visit www.autofinancialgroup.com.

Tim Kelly is president and chief operating officer of Auto Financial Group. He has more than 25 years’ experience delivering solutions to financial institutions. Contact him at tkelly@autofinancialgroup.com.

The post The 84-Month Trap: How Negative Equity Is Quietly Undermining Your Auto Portfolio appeared first on CreditUnions.com.

That realization landed with force for Tracy Verner, community development manager at Alltru Federal Credit Union ($392.5M, Wentzville, MO). After years of watching members absorb financial education but remain boxed out of the system, she began pushing the cooperative to rethink what real progress looks like — what financial empowerment looks like.

“Financial empowerment is information combined with access,” she says. “Many financial institutions offer well-meaning financial literacy — workshops, gamified apps — but it’s still just information. We’re doing an injustice if we provide information without the tools to apply it.”

The philosophy has changed the way the St. Louis cooperative operates, from product design to employee training. The result? Stronger culture, deeper partnerships, and helping more people who otherwise might have remained unbanked.

Gaps And Barriers

To truly empower members, it’s necessary to understand the barriers they face and examine who the credit union is not yet serving.

“If you’re truly committed to empowerment, it’s your responsibility to provide access,” Verner says. “Credit unions were built on inclusion, so ask: ‘Who’s being left out, and why?’”

An early experience in Verner’s credit union career underscored to her the importance of doing things differently. Speaking with a workshop attendee after an event, Verner learned the woman couldn’t open a checking account.

“I was floored,” Verner says. “She had steady income working for the city of St. Louis but couldn’t access a checking account. This was before fintech tools like Venmo or Cash App. She was receiving paper checks, and when the city stopped issuing them, she was forced onto a prepaid card with fees.”

Verner met with her boss and learned the woman had an incident in her ChexSystems report that barred access to checking. In these kinds of screening systems, even a single overdraft charge can easily turn a short-term issue into a multi-year obstacle. At the end of 2025, approximately 6% to 7% of U.S. households were unbanked, according to Bankrate, largely because of prior banking problems.

So, Alltru turned ChexSystems off.

“This was before the Bank On movement even reached St. Louis,” Verner says. “Altru was already questioning those barriers. Leadership was already asking why.”

Don’t stop here. The community development manager at Alltru FCU turned in her barbells for bank accounts and is building access one account at a time. Read more in “Tracy Verner Is Breaking Barriers In St. Louis Finance.”

Expanding Access Without Increasing Risk

Opening access at scale shifts responsibility inside the institution and can raise questions about risk management, making effective collaboration with finance and compliance teams essential.

“Our compliance manager tracks outcomes closely,” Verner says. “We’ve found people flagged in ChexSystems do not show higher fraud or delinquency rates. The data simply doesn’t support the perceived risk.”

Alltru regularly evaluates programs and purposefully keeps guardrails flexible. For example, the credit union noticed an issue involving fraud through ATM deposits among its youth workforce program. So, it pivoted.

“Instead of shutting it down, we increased our fraud education efforts, reduced ATM withdrawal limits, and added monitoring,” Verner says. “We didn’t stop the program. We refined it.”

Alltru takes the same creative approach to lending. Traditional secured loans tend to rely on upfront cash or collateral. That’s a barrier for members without savings. Alltru’s credit builder loan removes that requirement, although it doesn’t release funds immediately to reduce risk while still helping members build credit. In practice, however, early usage indicated Alltru needed to recalibrate the loan.

“Initially, it was $1,000 over 12 months,” Verner says. “We realized some members couldn’t handle that.”

Today, the Missouri cooperative offers loan options as low as $300 because even $30 every month can help members without creating excess financial strain. Alltru has also gradually leaned into relationship lending, and half of its first-time auto loan borrowers don’t have a credit score.

“You start with good intentions,” Verner says. “Then you refine based on real needs.”

Empowerment As An Organizational Mindset

Financial empowerment starts with understanding the consequences of credit union decisions. Verner spends time in the community working alongside nonprofits and listening to members outside the branch to identify where well‑intended policies still limit access.

“Being in the community, working with nonprofits, seeing real challenges brings up more questions,” she says. “It forces you to ask why.”

Of course, asking why only matters if it changes how people make decisions, which is why financial empowerment at Alltru also rests on a shared understanding of what it means to struggle, how strain shows up in everyday life, and who needs support.

“The rising costs of housing, groceries, and auto loans have impacted everyone,” she says. “This isn’t someone else’s problem. This is about our neighbors, families, and even our coworkers.”

That awareness changes decisions, from product design to flexibility at the margins. As a credit union focused on empowerment, Alltru is willing to look for ways to preserve access instead of restrict it.

Forward-thinking credit unions are leading with financial wellbeing. Alltru FCU’s evolution from education to true financial empowerment reflects a broader shift across the industry. The Member Engagement and Financial Wellbeing Consortium, led by Callahan & Associates in collaboration with Gallup, helps credit unions embed financial wellbeing into strategy, product decisions, and culture. Through shared insights and peer collaboration, participating credit unions are aligning around what drives real member confidence, engagement, and long-term growth. Learn how the Consortium is helping credit unions turn empowerment into measurable impact.

The post Why Financial Empowerment Matters More Than Financial Literacy appeared first on CreditUnions.com.

Consumer credit card debt rose by 116% year-over-year in 2025, according to a 2026 study from WalletHub. A full 78% of that increase came during the fourth quarter. With gas prices up more than 30% since the start of the Iran war and other prices expected to remain high, consumers could be reaching more for their credit cards in the months to come.

TOTAL OUSTANDING CREDIT CARD DEBT (ADJUSTED FOR INFLATION)
FOR U.S. CONSUMERS | DATA AS OF 12.31.25
SOURCE: WALLETHUB

STRATEGIC INSIGHTS

• At $1.33 trillion, total credit card debt is only slightly lower than its $147 billion peak in 2008.
• From a credit union industry perspective, credit card loan growth closed out 2025 at 3.41%, according to data from Callahan & Associates. That’s well below the fourth quarter 2022 peak of 15.88% but in line with historical norms since the Great Recession.
• Adjusted for inflation, average U.S. household credit card debt topped $11,561 at the end of 2025, a 2.3% increase from the prior year.
• The average member balance at credit unions was $3,403 at year-end. Some of that difference could be tied to lower interest rates at credit unions, which compound into comparatively lower balances over time.
• The rise in credit card debt is augmented by increases in the BNPL space. According to a PYMNTS series, 38% of credit union members say they would use BNPL if their credit union offered it. That figure nearly doubles for millennial and Gen Z members, nearly half (48%) of whom say they’ve already used outside providers like Affirm, Klarna, and others.
• It’s unclear how many credit unions currently offer in-house BNPL solutions. A March 2024 study from PYMNTS and Velera found just 1.5% of credit unions offered the service.

The post Consumers Are Financing The Future Any Way They Can appeared first on CreditUnions.com.

Credit unions committed to serving members with limited or impaired credit operate at the intersection of access, trust, and protection. Fraud management plays a critical role in that mission, but many accept fraud losses that are neither inevitable nor sustainable.

Internal portfolio analysis reveals a striking disparity across the industry. While the average fraud loss rate hovers around 25%, some institutions operate with loss rates as low as 6% without restricting access, increasing false positives, or eroding member trust. The difference between these outcomes: strategy.

The Financial Impact Of The Gap

To understand what this gap means in practical terms, consider a mid-sized credit union with $7 million in annual dispute dollars.

• At a 25% fraud loss rate, approximately $1.75 million of that total reflects loss tied to process inefficiencies, delayed resolution, and misclassified disputes.
• At a 6% loss rate, that loss drops to roughly $420,000.

That’s a difference of $1.33 million every year. For institutions operating on thin margins, this gap can materially impact financial performance.

Why Credit Unions Feel This More Acutely

Research by Cornerstone Advisors provides context for why many credit unions struggle to close this gap. Credit unions earned an average fraud experience score of 75, placing them squarely in “C-grade” territory and trailing several large issuers.

Only 5% of credit union cardholders rated their fraud experience an A, while nearly a quarter graded it a D or F.

Notably, the biggest gaps appeared in:

• Provisional credit issuance.
• Investigation and documentation collection.

These steps are where friction accumulates through manual handoffs, inconsistent timelines, limited self-service, and poor visibility into case status. While more than half of cardholders believe their disputes are resolved within a week, Cornerstone’s research shows 1 in 5 experiences resolution times longer than two weeks, often due to operational bottlenecks rather than investigative complexity.

For credit unions serving subprime or financially stressed members, these delays carry outsized consequences. Access to funds matters more, patience is thinner, and trust is more fragile.

Fraud Experience Is A Relationship Decision

Cornerstone’s data underscores a critical reality: fraud resolution quality directly shapes member behavior. Among cardholders who rated their experience an A:

• 87% reported increased confidence in their institution.
• 39% increased card usage.
• 81% were more likely to add products.
• 83% said the relationship was strengthened.

By contrast, poor experiences drive disengagement, reduced card usage, and attrition.

Proof The Gap Is Real And Fixable

Rogue Credit Union’s experience illustrates what’s possible with the right operational strategy.

“We were seeing about $2.5 million in fraud losses a year,” says James Richie, vice president of payment services at Rogue Credit Union ($4.2B, Medford, OR). “Now, with Quavo, we’ve been able to cut that by close to 60–70%.”

Institutions closing the gap between 25% and 6% loss rates consistently focus on:

• Parallelized investigations instead of linear workflows.
• Clear, auditable provisional credit handling aligned with Reg E and Reg Z.
• Real-time visibility into case status for staff and members.
• Fewer handoffs and less rework across dispute teams.

Protecting The Mission By Eliminating Waste

Serving the underserved does not require absorbing losses as a cost of compassion. Every avoidable fraud dollar represents longer wait times for real victims, fewer resources for prevention, and less capacity to support members when it matters most.

Credit unions that modernize fraud operations are discovering that lower losses, stronger relationships, and better experiences are not competing priorities. They are the same outcome delivered through better strategy.

Explore the full Fraud Experience Differentiator from Cornerstone Advisors x Quavo.

Steve Durney is VP of Partnerships & Alliances at Quavo. Contact him at steve.durney@quavo.com.

Quavo is a technology partner and strategic advisor helping financial institutions resolve fraud and disputes faster and more transparently. Its award-winning platform automates the dispute lifecycle end to end, enabling institutions to reduce losses, ensure compliance, and strengthen customer trust at scale.

The post Serving The Underserved Without Accepting Preventable Fraud Losses appeared first on CreditUnions.com.

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.

The post The Lending Lag Is Real, And Here’s What Smaller Credit Unions Can Do About It appeared first on CreditUnions.com.

Consumer lending insights in the video come from TruStage’s 2025 Consumer Lending Preferences Study. 2025, March. TruStage^TM is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, Wis.

LPS-8248416.1-0825-0927

The post Understanding The Lending Recall Gap appeared first on CreditUnions.com.

CDFI grant funding has helped Innovations Financial Federal Credit Union ($651.9M, Panama City Beach, FL) expand access to capital for small businesses in and around the Florida Panhandle.

A pre-COVID grant helped the credit union launch a microlending program that provides up to $50,000 to small businesses in its market and continues to make a difference in the region.

The Problem

The bank landscape in Florida has substantially shrunk since the Great Recession. Many small and mid-size local banks have closed their doors or merged with larger entities, leaving a void in the commercial lending space.

Hurricane Michael in 2018 exacerbated the problem when it decimated the Panama City area and dealt a death blow to local businesses across the region.

The Solution

With CDFI grant funding, Innovations Financial implemented a microlending program for small businesses and entrepreneurs starting new businesses. The credit union made up to $25,000 in unsecured funds available and up to $50,000 available for loans secured by homes, equipment, or real estate. Both loans were available to borrowers with a minimum 650 credit score and business plan proforma or documented LLC.

“None of these are loans you would make under traditional financing,” says David Powell, chief operating officer. “Because of the small dollar amount, it truly is the mom and pop shops. It’s the guy working at a company and doing a side gig who wants go out and do his own thing. It’s the husband and wife who want to start a side gig.”

The credit union can offer a term loan or a line of credit for the $25,000 option as long as borrowers meet the minimum 650 credit score and other stipulations. It prices those loans between 10.5% and 14.5%. The collateral-secured loans it prices at market rate.

Loan applications have been evenly split between new and existing members, and some applicants have told loan officers they were referred by their bank because the institution couldn’t make the loan.

The Results

Although the national economic picture has been rocky, Powell says Florida’s economy behaves somewhat differently because of the heavy influence of tourism and the military.

“If you boil it down to the Panhandle, we’re even more insulated than the rest of the state,” the COO says. “Then boil it down to Bay County and the surrounding counties, and we’re even further insulated.”

According to Powell, steady economic growth in the past decade spurred on by people and businesses moving into the region has helped fuel the microlending program. The credit union has made more than $8 million in microloans since 2018, and with a default rate of just 6%, the program has been “wildly successful.”

“There’s hardly anyplace small businesses can go to get money to start up, so we were absolutely fulfilling that need in all the areas we serve,” Powell says.

A partnership with the Small Business Development Center, offered through the University of West Florida, has helped drive applications. Many startups and small businesses work with the center on business planning, and the center frequently refers those entrepreneurs to the credit union.

And even when some borrowers have gone out of business, they’ve continued to pay back the credit union, says Powell.

“It’s been pleasantly surprising to see the level of commitment,” he says. “I think what saved us is that 650 credit score cutoff, which I would allege tells someone’s character to a good degree. Even if they go out of business, they understand they’re on the hook and don’t want their credit to suffer. And because the loans are generally small, they can generally afford to pay it.”

Lessons Learned

A proactive collections process has contributed to the program’s success. Rather than waiting until the end of a 15-day grace period to reach out as the credit union does on normal business loans, credit union representatives call these borrowers to check in within a few days of a payment’s due date.

“These small business loans are generally not sophisticated borrows,” Powell says. “Lots of times they just forget to make the payment and need a reminder. We’ve found it to be a best practice to start collections with these microloans very early in the past-due process. We don’t want to let them get behind because once they’re behind they can’t catch up.”

The partnership with the Small Business Development Center has been crucial to the program’s success, Powell says, and he advises other credit unions to investigate similar offerings in their own markets. But even with that help, credit unions need to be sure they understand applicants’ business plans as well.

“Be sure you understand how to manage and control that risk,” he says. “How to read people’s credit reports, how to understand what they’re telling you in the business plan, how to collect on the back end, and so forth.”

The post Innovations Financial Bets Big On Small Business Lending appeared first on CreditUnions.com.