Auto Lending Gains Set the Pace for Ohio Unions in 2013
Ohio credit unions finished 2013 on a strong note, benefitting from continued improvements in both economic and labor market conditions.

The ongoing Ohio economic recovery helped to push credit union loan balance increases above savings increases for the second consecutive year.   Overall, credit union loan portfolios grew by 1.5% (6.0% annualized) in the final 3 months of the year and by 9.9% in the twelve months ending December 2013.  In contrast, savings balances increased by 0.60% (2.4% annualized) in the fourth quarter and by 3.0 % in the year. 

Auto lending continued to drive overall loan growth results in 2013 as pent-up demand pulled more consumers into dealer showrooms.  The surge in purchasing activity in Ohio was reflected in a 25.6% full-year jump in credit union new vehicle loans and a 9.8% increase in used auto loans. 

Importantly strong 2013 lending results were not limited to the auto arena – gains were broad-based with increases evident in nearly every key loan category: First mortgage loans grew by 10.9% in the year, while business loans increased by 8.4% and personal unsecured loans (+8.6%) and credit cards (+7.1%) also showed solid gains.  

Improving labor markets and a solid housing market rebound both helped consumer finances and put more Ohioans in the mood to borrow.  For example:

Ohio’s economy added 26,000 jobs in 2013, which helped to push the unemployment rate back down to 7.2% by year-end 2013 according to the Bureau of Labor Statistics.

Ohio home prices continued to increase, with 4.3% jump in the year ending September 2013 (the most recent data available) The Federal Housing Finance Agency’s purchase-only index data shows the 4.3% increase is nearly double the 2.6% full-year improvement in 2012. 

Household balance sheets improved reflected in the fact that Ohio credit union borrower-bankruptcy filings continued their steep decline, falling by 7.5% in the year ended December 2013.

As shown in the following chart, Ohio credit unions continue to offer substantial financing advantages on a variety of loans.

Ohio Consumer Loan Interest Rate Averages
February 10th 2014 – Source: Informa Research Services
Product
OH Credit Unions
OH Banks
CU-Bank Difference
Unsecured personal $5,000/3 Yr.
10.17%
10.63%
-0.46%
Credit Card Platinum
9.12%
10.93%
-1.81%
New Vehicle – 5 Yr.
2.66%
3.48%
-0.82%
Used Vehicle – 4 Yr.
2.72%
3.45%
-0.73%
 
The current average rate on a 5-year new auto loan at the state’s credit unions now averages 0.82 percentage points lower than the comparable rate at the state’s banking institutions.  On a $30,000 new car loan the credit union advantage saves the average Ohio consumer roughly $105 per year – or $525 over the life of the five-year loan.

Ohio consumers are increasingly recognizing these and other significant benefits of credit union membership.  Total memberships in the state’s credit unions grew 0.22% in the fourth quarter and by 3.04% in full-year 2013 – the strongest annual increase in over a decade.  In contrast, the Census bureau reports that the state population grew by 0.15% in 2013.
 
The information in this report is based on a sample of large Ohio credit union operating results.  This quarter’s report is based on results of 27% of Ohio’s federally-insured credit unions that collectively serve 80% of the members and manage 86% of the assets in federally-insured credit unions throughout the state. 

Ohio credit unions – the state’s not-for-profit, member-owned alternative to banks - serve a broad cross-section of 2.8 million working-class consumers in the state.  As not-for-profit institutions credit unions return earnings to their members in the form of lower interest rates on loans, higher savings deposit yields and fewer and lower fees compared to banks.  In the aftermath of the financial crisis more Ohio consumers are choosing credit unions as their best financial partner.