Paying Attention: Georgia credit unions’ portfolios show signs of maturing economic recovery

Paying Attention: Georgia credit unions’ portfolios show signs of maturing economic recovery

Annualized lending growth at Georgia credit unions slowed, but remained strong into the second quarter of 2018 as the economy continued to improve.

“We continue to see signs of a mature economic recovery,” said Georgia Credit Union Affiliates CEO Mike Mercer. “Loan growth is still robust but moving off the levels we saw in the peak growth years between 2014 to 2016.”

Lending grew at 6.8 percent on a year-over-year basis at Georgia’s credit unions in the second quarter. That’s strong growth, but not quite the frenzied 11 percent pace the state’s credit unions experienced during the economy’s peak growth years that followed the recession.

Georgia’s credit unions have gone from doing about $11.9 billion in lending at the midway point of 2014 to about $16.7 billion halfway through 2018.

During the past five years, auto lending has grown aggressively at Georgia’s credit unions as the economy has continued to recover. In June of 2014, for example, Georgia credit unions posted 14.2 percent growth in used automobile lending and 30.8 percent in used auto lending.

Like overall lending, those growth rates have slowed as the economic recovery has matured – but credit unions still posted respectable auto loan growth of 7.4 percent on new auto loans and 8.5 percent on loans for used vehicles.

Home loans also followed a pattern of cooling growth in sync with the economy’s recovery. First mortgage lending grew by 5.7 percent annualized, falling from a 10 percent growth rate in 2015. With interest rates rising, credit unions could have expected strong growth in second-lien mortgage lending – including HELOCs and second mortgages.

But that didn’t play out in Georgia, where second-lien mortgages grew by only 4.7 percent, cooling from 12.3 percent annualized in June of 2015.

Not all lending categories have risen and tapered off as the economy has traveled through the stages of recovery. Members have increasingly trusted credit unions to provide them with credit cards over the past five years. Midway through 2018, credit card lending showed annualized growth of 4.4 percent, up from 2.9 percent annualized in 2013.

Georgia credit union membership is on track to grow almost 5 percent this year. Georgia credit unions have 2.1 million members, more than 20 percent of the state’s population.

Also featured in: Georgia CEO

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