In a landscape of economic uncertainty and lawmaker pressure, credit unions stand at a pivotal crossroads: They are challenged to reaffirm their relevance even as they double down on efforts to differentiate themselves, steer into their specialties, and reinforce member trust and loyalty.

Although the credit union movement continues to grow, the rate at which it has added new members has drastically slowed in the past three years. At mid-year 2025, the industry’s annual membership growth dropped to just 1.88%, the slowest rate since the fourth quarter of 2011.

Factors contributing to these growth dynamics include higher interest rates, liquidity pressures, and the larger slowdown of the U.S. economy; however, changes to membership growth strategies and difficulties in marketing to a new generation also play a role.

NET NEW MEMBERS AND MEMBERSHIP GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

The Credit Union Member At Midyear

Credit union membership has notably fluctuated in both members gained and member growth in the past decade. The industry reported particularly strong growth in the post-COVID years, when excess liquidity from the CARES Act drove credit unions to source loan demand from indirect partnerships. Growth peaked in 2022 and 2023 with more than 5 million new members per 12-month period and growth exceeding 4%.

However, membership growth started to decelerate in 2024 and dropped to just 1.88% in the second quarter of 2025. Net new members fell to approximately 2.7 million at midyear amid changes in credit union strategy, rising competition from fintech and traditional banks, and shifting consumer preferences.

INDIRECT LOAN GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

Changes In Credit Union Strategy

In mid-2023, indirect loans comprised nearly 25% of all credit union lending, suggesting an imbalance in membership focus.

At that time, many credit unions already recognized their balance sheets were skewing in favor of indirect members and were taking steps to re-engage with and nurture their core membership roots. Consequently, growth in indirect lending started to decline sharply in late 2022 and turned negative by the end of 2024, where it has remained in 2025.

Competition And Consumer Preferences

Even as credit unions consciously change their membership growth strategies to focus on direct member relationships, they must navigate a field of increased competition and battle for market awareness. Shifting consumer preferences toward digital-first experiences and personalized service further intensify the challenge. Large banks and fintechs possess the scale and financial resources to invest in state-of-the-art digital presences and attract consumers through targeted marketing and smooth rate-shopping interfaces.

CREDIT CARD LINES AND UTILIZATION
FOR U.S. CREDIT UNIONS
SOURCE: Callahan & Associates

Impacts On Penetration

Despite their renewed focus on core members, many credit unions have struggled to develop lending relationships with them. As of June 30, 2025, less than half of credit union members held a direct loan with their credit union.

This disconnect is reflected in product engagement trends. Product penetration rates have been volatile, with credit cards and first mortgages both dipping during the pandemic, then recovering. Rates climbed to their highest levels ever in late 2022 and early 2023; unfortunately, they declined to pre-pandemic levels in 2025.

Credit unions reported a decline in overall credit card usage during the pandemic as cautious consumers reduced spending and avoided taking on new debt in the face of widespread economic disruptions and financial uncertainty. Members didn’t need to tap credit cards or HELOCs when they were at home and had access to relief packages.

Since then, utilization rates have climbed but have yet to surpass pre-pandemic rates. This might indicate members are struggling less than they were before the pandemic. It could also be a sign that members are not relying on their credit unions and are instead tapping credit elsewhere.

The Price Of A New Member

Despite slowing membership and penetration, credit unions are working to re-establish close relationships with members. Broadly speaking, member acquisition depends on how a credit union performs in three key areas:

1. Does the credit union understand its membership’s needs?
2. Can the credit union effectively tell its story and present itself as the solution?
3. Is the credit union able to push this story in front of current or potential members?

Those who can answer “yes” to these questions tend to do well in acquiring and engaging members.  However, member acquisition also tends to involve rising costs and new investments in surveying, branding, product design, and marketing — often through digital channels.

The cooperative, member-focused model provides a leg up in the competitive marketplace. How effectively credit unions tap into that advantage depends on how they balance operational sustainability with their missions to serve. Ultimately, credit unions that can clearly articulate their value — and deliver it with consistency — will be best positioned to turn their cooperative advantage into lasting member loyalty and market relevance.

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Credit unions have long used incentives as a crucial tool for driving performance and enhancing member service. Aligning the right rewards with organizational goals can motivate staff to exceed targets while fostering innovation and maintaining a member-centric focus.

At Shoreline Credit Union ($128.2M, Manitowoc, WI), corporate goals are based on the department, and employees can earn up to 4% of their annual wages by meeting those goals. For example, MSRs might increase their call answer percentages, lenders might boost penetration scores, and accounting staff might improve response times.

“The key for any good leader is learning what motivates their staff,” says Nathan Grossenbach, president and CEO at Shoreline, which has offered corporate goals for four years and direct incentives for 10. “Our incentive programs are designed to achieve success on a select few impactful core strategies. A person who is focused on — and rewarded for — achieving a goal that they can control is a beautiful thing for the employee, the member, and the credit union.”

Shoreline’s direct incentives are geared toward production staff, such as lenders and front-line employees. Those incentives are based on production volume as well as specific product and service promotion. For example, consumer lenders can earn between $500 and $1,500 per month. Mortgage lenders can earn between $500 and $3,000 per month, with some making as much as $5,000 in peak months. Front-line staff incentives range from $50 to $300 per month, Grossenbach says.

What Can You Learn From Like-Minded Leaders? Callahan’s Roundtables connect credit union leaders with peers from across the industry, allowing everyone the opportunity to pose questions, share best practices, and talk openly about challenges and opportunities. Want to hear what other credit unions are tackling incentives? Join us at a Callahan Roundtable. Learn more today.

More than 500 miles to the southeast, Atomic Credit Union ($659.7M, Piketon, OH) takes a different approach. It embraces a direct-incentive-only strategy to create an exciting, competitive atmosphere that drives performance, says Aaron Michael, chief operating officer and general counsel.

Atomic’s incentive structure is based on three components. Its auto recapture program incentivizes tellers and lenders to refinance auto loans from other institutions. Participants earn gift cards based on referrals and closings, with higher loan volumes attracting higher-value cards. In 2024, 90 employees qualified for this incentive, which Michael says underscores its appeal and effectiveness in driving loan growth.

Next, the collector incentive program offers collections staff performance-based bonuses to reduce delinquency rates. Collectors can earn $100 for individual performance and an additional $100 for meeting team goals. Michael, who is nearing his 20th anniversary at Atomic, says the program has significantly reduced turnover and burnout, fostering long-term relationships between staff and members.

Finally, the GAP (Guaranteed Asset Protection) program pays $25 for each policy sold, with top performers receiving substantial annual bonuses. This program not only motivates staff but also promotes a valuable product that helps protect members during financial losses, Michael says.

Atomic’s auto recapture and GAP programs have been in place for more than 10 years, the collections incentive for approximately four, Michael says. The credit union assesses each program every year, with a special eye toward ensuring a holistic approach in the collections process during that program review.

Among Atomic’s 267 employees, Michael says, 58 lenders, 86 tellers, and 10 call center representatives participate in the auto recapture program. Seven staffers in the collections department qualify for that incentive program.

To the northwest, Shoreline includes all staff except executives and upper managers in its corporate goal plan. Production staff are eligible for both the direct and corporate goal plans. This comprehensive coverage ensures the majority of employee performance is aligned with the credit union’s objectives, Grossenbach says.

Financial Impact And Strategic Value

Both Shoreline and Atomic have carefully designed their incentive programs to balance motivation with financial sustainability. Shoreline’s incentives constitute 3-6% of total salaries annually, according to Grossenbach. And, like at Atomic, it reviews its incentive programs annually to ensure they remain aligned with strategic goals and market conditions. Atomic keeps incentives costs to less than 1% of the total payroll, and generally doesn’t exceed that percentage for individual employees.

Both credit unions have observed tangible benefits from their incentive programs. Michael says the collector incentive program has reduced delinquency rates and improved member relationships. This demonstrates the value of targeted incentives in addressing specific organizational challenges by providing clear, attainable goals.

Grossenbach, meanwhile, says incentivizing staff to promote personal teller machines led to a smoother transition and higher member adoption rates when the new technology was installed in that cooperative’s three-branch network.

“The staff had their talking points down — clearer audio and video, faster response times, expansion of transaction capabilities, etc.,” the CEO says. “Preparedness of staff and then that of the members was well worth the $2,500 we paid in incentives.”

Service Culture With A Competitive Twist

Incentive programs also play a sizeable role in shaping workplace culture. Grossenbach — who has been with Shoreline for the past 11 years, seven as CEO — says Shoreline’s corporate goal plan fosters unity and accountability across departments. This also leads to consistent service quality across branches as employees work toward shared objectives and hold one another accountable.

Michael, meanwhile, notes that Atomic Credit Union’s programs create a fun, competitive atmosphere that motivates employees without becoming the primary source of their income. This balance helps maintain a positive work environment while driving performance, he says.

Both credit unions adjust their incentive programs based on experience and changing market conditions. Shoreline, for example, simplified its incentive structure four years ago, removing complex elements like claw backs and multipliers to make the system more transparent and manageable. The changes were well-received and made incentives easier to track and administer, Grossenbach says.

A Test And A Testament

Shoreline managers decided not long ago to test the incentive concept, hiring a production-side employee on flat salary that had the typical incentive for that position baked in, Grossenbach says.

“This person did fine and took care of our members but made minimal effort to go beyond what the member asked for,” the Shoreline CEO says. As a result, the staffer routinely performed below the average for their incented counterparts.

Grossenbach admits there is a fine line between educating members about their options and pushing a hard sale. That shouldn’t be an issue, however, if the employee is presenting responsible, valuable products and services with the member’s best interest in mind.

And, importantly, employees aren’t working on a commission-only basis.

“Incentives are primarily used as an additional opportunity for staff to earn extra money and to create a fun competitive atmosphere among certain promotions,” says Michael at Atomic. “This approach not only benefits employees but also ensures members receive the best possible service, reinforcing the value of incentive programs in the credit union industry.”

The post Incentives That Power Performance And Improve Outcomes appeared first on CreditUnions.com.

CREDIT UNION PENETRATION RATES
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.24
© Callahan & Associates | CreditUnions.com

Benchmark Your Product Usage With Ease. You work hard to ensure your products reach the right members. Now, find out how your product penetration stacks up against peers. Callahan’s performance benchmarking tool, Peer Suite, makes it easy for credit union leaders in any role to measure performance, identify new opportunities, and support strategic plans. Learn More Today.

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growth and cooling inflation have brightened consumers’ long-term outlook. At the end of June, the Conference Board’s Consumer Confidence Index rose from 102.5 to 109.7. However, only 30.3% of respondents to the same survey reported they expect their family finances to improve in the next six months, and 69.3% of respondents believed a recession is somewhat or very likely during the next 12 months.

This mixed-to-negative near-term outlook will greatly affect how Americans interact with their financial institutions and has the possibility to spark a self-fulfilling prophecy across the economy itself.

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Key Points

• The average member relationship inched up 1.4% year-over-year. Loans per member climbed 8.0% year-over-year, whereas the average share balance fell 3.0%.
• Stronger certificate demand and higher cost of funds boosted annual dividends per member $103 year-over-year to $153, the highest amount since the third quarter of 2009.
• Annualized loan originations per member fell sharply year-over-year, declining 33.8% to $4,079. Amidst higher rates, members are less inclined — or less able — to borrow.

Performance At-A-Glance

Membership grew 3.8% annually at credit unions as Americans trusted cooperatives with their savings and lending needs.

Liquidity has been a concern for credit unions, and cooperatives are using increased interest earnings to reward savers with greater dividends per member.

Penetration rates increased across the board. Indirect channels remain hot and drove the notable increase in auto lending across membership.

The Bottom Line

The way members interact with their credit union has changed substantially during the past few years.

In 2021 and 2022 — when rates were low — loan demand hit record highs, and members dumped excess savings into liquid deposit products that bore little interest. Now, after a year of rising rates, consumers are more reluctant to take on costly financing. Additionally, inflation has eaten up much of the savings members had set aside, creating liquidity concerns at cooperatives. Credit unions have raised new deposits predominantly in the form of high-yield certificates and other term products.

Credit unions have had to accommodate both of these dramatically different member engagement profiles in a short period of time, which highlights their ability to be flexible to meet members’ needs no matter what challenges the economy throws their way.

How Do You Compare?

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CREDIT CARD PENETRATION
FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.23
© Callahan & Associates | CreditUnions.com

• During the COVID-19 pandemic, credit card spending declined drastically. It bottomed out at 17.2% but began to bounce back starting 2021.
• Thanks in part to lower rates, credit card penetration at U.S. credit unions has increased 73 basis points in the past five years, trending upward alongside a rise in the average credit card balance.
• Credit card lending at credit unions jumped 14.39% from the second quarter of 2023 to the third. Notably, the average credit card balance at credit unions reached $3,072 in the second quarter of 2023. This is the highest balance recorded since the fourth quarter of 2019. Nationwide, national credit card debt surged more than 4%, or $45 billion, in the second quarter according to reporting by CNBC.
• Heightened spending activity has contributed to a noticeable uptick in credit card net charge-offs, which increased 137 basis points year-over-year at credit unions.

How Does Your Credit Card Portfolio Compare?

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Adaptation, however, does not equate to comfort.

In the same survey, 72% of survey respondents reported their income growth lagged their costs of living.

In a survey from the Achieve Center for Consumer Insights, young consumers — especially Gen Z — are most susceptible to falling behind financially and more likely to consider risky financial choices — such as borrowing from retirement savings — to cope with higher costs. Only 8% of all respondents reported contacting their financial institution for help, highlighting how worried consumers might not be prudently addressing their situation.

Credit Union Key Points

• The average member relationship — the average share balance plus loan balance — grew 3.0% annually to $23,804. The average share balance declined as members struggled to save, but the average non-commercial loan balance expanded 12.1% during the past 12 months. That’s an annual increase of $1,096.
• Annualized dividends per member reached $135, the highest give-back value since 2009.
• Credit card penetration was up 44 basis points year-over-year to 18.1%, the highest rate on record. The average balance per card also increased $215 annually to $2,998 as members contended with higher costs of living.

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Performance At-A-Glance

MEMBERSHIP GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

PENETRATION RATES
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

REVENUE AND DIVIDEND GROWTH PER MEMBER
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.23
© CALLAHAN & ASSOCIATES | CREDITUNIONS.COM

The Bottom Line

Thanks in part to rate hikes and a rise in higher-yielding share certificate balances, cooperatives are returning more money in dividends per member than at any point in the prior decade. Member relationships are also deepening on the lending side as they seek out loan products to cover costly expenses.

However, loan portfolios will face challenges if members under financial duress are unable to make payments. Younger generations in particular are more likely to be struggling financially and disenchanted with the state of the economy. Credit unions have an opportunity to extend a guiding hand and cultivate these fledgling member relationships.

This blog originally appeared in Credit Union Strategy & Performance. Contact Callahan & Associates to learn how you can gain access today.

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Anecdotally, Callahan & Associates has observed an uptick in the use of automated decisioning for the consumer loan portfolio.

Additionally, Callahan clients have requested more information on the automated decisioning activities of other credit unions in this area of business.

Read on for insights from the survey. Use the interactive features below to dig deeper into different asset-based ranges.

The post Trends In Automated Decisioning For Consumer Lending appeared first on CreditUnions.com.

These price hikes are the result of an imbalance in supply and demand driven mostly by the microchip shortage. Major car manufacturers predict the new vehicle production pipeline won’t be able to effectively meet demand until 2023. Until then, consumers, many of whom are starting to resume their post-COVID work commutes, will continue to pay top dollar in the used auto market.

Key Points

• Total auto loan balances expanded 6.4% annually to $408.6 billion as of Dec. 31. New auto balances declined 0.1%; used auto balances were up 10.3% year-over-year.
• Outstanding indirect loan balances grew 7.2% annually. Indirectly sourced loans comprised 61.5% of total auto loans for credit unions at year-end.
• Auto loan penetration increased 2.6 percentage points year-over-year and 93 basis points quarter-over-quarter. A record 24.1% of members had an auto loan as of Dec. 31.
• Auto loan delinquency increased 7 basis points from the third quarter to 0.42%. However, it is still down 8 basis points from one year ago and remains at historically healthy levels.

NEW VS USED AUTO BALANCES

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.21

Callahan Associates | CreditUnions.com

Callahan Associates | CreditUnions.com

Callahan Associates | >CreditUnions.com

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Americans tapped into their pandemic-era savings and borrowed at low rates, contributing to hot real estate and used auto markets. With spending up, deposit growth slowed from a quarter ago, but savings rates remain healthy. Many but not all Americans are ready to spend after more than a year of lockdowns and quarantines, and fourth quarter results reflected this sentiment.

Still, recent international trade sanctions and continuing inflation cast shadows over member spending behavior in the near future.

Key Points

• Total membership at U.S. credit unions nationwide grew 4.2% year-over-year to 131.0 million as of Dec. 31.
• Auto penetration increased 2.6 percentage points in the past 12 months, reaching a record 24.1% as of Dec. 31.
• Year-to-date loan originations per member increased 12.7% annually to $6,081 through Dec. 31.
• The average member relationship increased 6.0% annually to $22,534. Average share and loan balances increased 8.2% and 2.7% year-over-year, respectively.

MEMBER GROWTH

FOR U.S. CREDIT UNIONS | DATA AS OF 12.31.21

Callahan Associates | CreditUnions.com

Callahan Associates | CreditUnions.com

Callahan Associates | CreditUnions.com

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This year’s tournament has provided plenty of story lines. The St. Peter’s Peacocks stole America’s heart but were eliminated in the Elite Eight. Coach K and the Duke Blue Devils are still dancing, and Kansas is back in the Final Four after being the favorite to win it all in 2020. The Jayhawks will be playing Villanova, the same team that trounced Kansas in the semifinal game in 2018.

This year, Callahan is reigniting a beloved tradition using credit union data to predict the outcome of each Final Four game. Three top-level growth rates will predict the semifinal games; share draft penetration, average member relationship, and delinquency will predict the championship.

First up, Villanova and Kansas face-off with Pennsylvania and Kansas credit union performance. Then Duke and The University of North Carolina at Chapel Hill two Tobacco Road schools that are only 10 miles apart take the court using Durham-area credit union performance and Chapel Hill-area credit union performance, respectively.

Semifinal #1: Villanova Vs. Kansas

Kansas is looking for revenge in this rematch of the 2018 Final Four game where Villanova handed the Jayhawks a 16-point loss. The team has grown a lot since then, and so have its state’s credit unions.

Let’s take a look at how Kansas compares to peers in Villanova’s home state of Pennsylvania.

Credit unions in Pennsylvania dominate in annual loan growth. They beat not only Pennsylvania cooperatives but also soar above the national average of 8.0%. Kansas, however, isn’t going to make this easy. Kansas credit unions grew assets at an impressive 11.8%, besting peers in the Keystone State by 1.8 percentage points. It all comes down to members, which credit unions in Pennsylvania grew by 4.4% in 2021 to solidify the victory for the Villanova Wildcats. In the end, the consistency and experience of Pennsylvania credit unions are too much for Kansas, which means the Jayhawks won’t be tasting revenge this year.

Winner: Villanova

Semifinal #2: Duke Vs. University of North Carolina

Duke will have to get through its rivals from down the street to make it to the championship game in Coach K’s historic final season. To get a sense of how close this rivalry is, of the past 100 meetings, each team has won 50 games. However, they’ve never met in the NCAA tournament, which makes this matchup a can’t-miss television event.

Durham credit unions will represent Duke. Credit unions with branches in the Chapel Hill area will represent UNC.

Chapel Hill credit unions start out strong in loan growth, which more than doubles their rivals across town. However, Durham credit unions come back strong with asset growth of 18.4% in 2021. The two teams are neck and neck going into the final metric.

These games are always close, and this isn’t an exception. Durham credit unions posted an impressive 11.7% annual member growth, almost tripling the national average to earn the victory and give Duke a spot in the national championship. It appears the Blue Devils will survive to play another day.

Winner: Duke

National Championship: Duke Vs. Villanova

This is sure to be an intense championship game between two storied basketball programs. The two teams have eight national championships between them, with Villanova winning its most recent one in 2018 and Duke in 2015.

Pennsylvania credit unions have a way of reaching out to members and encourage a primary banking relationship. Share draft penetration is a notable 57.9%. But Durham credit unions win points for encouraging banking relationships, too. The average member relationship for these credit unions is $24,011 a full $2,626 higher than their competition up north.

The quality of assets will decide which team will cut down the nets. Pennsylvania cooperatives boast an impressive 0.37% delinquency, compared to 0.91% for Durham credit unions. Lower is better for this metric, and Pennsylvania credit unions beat the national average by 12 basis points.

National Champion: Villanova

According to the credit union performance data, Villanova will reign supreme. This will be Villanova’s third championship in the past seven years, an eye-popping statistic considering only a handful of schools have won more than three championships in their entire existence. Villanova is a powerful team and continues to improve, much like its local credit unions.

What do you think? Drop your predictions in the comments below.

The post Callahan’s Guide To The 2022 Final Four appeared first on CreditUnions.com.