CHICAGO (3/29/13)--Loan growth, with auto loans likely being the most promising area, is the critical business issue facing the credit union industry in 2013, roughly two-thirds of credit union executives told TransUnion in a new survey. More than half of credit union respondents said auto loans are their biggest opportunity.
TransUnion administered the survey to 104 credit union executives at the CUNA Governmental Affairs Conference in Washington, D.C. in late February. Nearly all respondents from across the U.S. were board members, executives or in managerial roles for their credit union.
"Many credit unions are finding that auto loans provide a great revenue opportunity as delinquencies continue to stay near historic lows," said David Dodson, credit union vice president in TransUnion's financial services business unit. "TransUnion projects auto loan delinquencies to continue to remain low with balances rising for the remainder of the year-- pointing to more new- and used-auto sales."
TransUnion's latest auto loan Trend Data report found that 60-day auto-loan delinquencies stand at 0.41% as of fourth quarter 2012, and will likely remain around 0.4% at the end of 2013. Bank auto debt per borrower has risen for seven consecutive quarters and is expected to rise from $13,747 in fourth quarter 2012 to above $14,000 by the end of 2013.
Some credit union executives surveyed said their best opportunities for loan growth are with mortgage (18%) and small business (13%) loans--an indication that the housing market may be improving, the company said. TransUnion data also support this. It expects 60-day mortgage-loan delinquencies to experience a double-digit percentage drop in 2013.
Regarding those small business loans, credit unions want to do more to help people start up or grow their small businesses. That's why the Credit Union National Association and credit unions supported legislation reintroduced in Congress last month to raise credit unions' MBL cap to 27.5% of total assets, up from 12.25%. Doing so would generate $14.5 billion available for MBLs--and increase jobs by 158,000 in the first year without costing the taxpayer, according to new statistics from CUNA.
While most credit union respondents (68%) said loan growth was the biggest critical issue they were facing this year, 11% indicated regulation was their main concern. Technology/operation efficiencies (7%) and membership growth (6%) also were cited as major issues this year.
The biggest challenges to meeting loan-growth goals are competition from large banks and captive finance companies (40%), regulation (27%) and a lack of prospects (17%), said credit union respondents.
"Loan growth is traditionally the biggest concern for credit unions, but it is interesting to see regulatory scrutiny and operational efficiencies called out as critical issues by some credit unions," said Dodson. "Credit unions realize that to effectively compete and grow in today's market, technology and analytics must be leveraged to help in acquisition efforts and to know how to best maximize members' wallets at the right time in the [member] lifecycle."