Banks Post Strong Third Quarter Gains Across All Major Credit Sectors

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This week, banks are offloading tons of data on loan origination and other third-quarter results – two weeks before the NCUA releases its reports for credit unions.

So far, the biggest banks appear to be showing continued gains in auto loans, mortgages and credit cards, with most areas showing gains beyond pre-pandemic levels.

Brian Moynihan, CEO of Bank of America in Charlotte, North Carolina, said consumers are more willing to spend and borrow, which he says bodes well for the economy.

“The pre-pandemic organic growth machine has restarted,” Moynihan said. “Consumers still have a lot of money in their pockets and they’re going to spend it.

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Third-quarter mortgage originals were the highest in at least two years for Bank of America of Charlotte, North Carolina, JPMorgan Chase of New York, US Bank of Minneapolis and Wells Fargo of San Francisco. The combined $ 134.4 billion of first mortgage originations increased 5% from the previous quarter, 8.8% more than a year earlier and 12% more than previously. is two years old.

The Mortgage Bankers Association estimated third-quarter loan installments for all U.S. lenders to be $ 915 billion, down 21% from the previous year and 13% from the second quarter.

Credit card spending also set a two-year high of $ 339.4 billion in the third quarter at all four banks. It was 22% higher than two years earlier, 29% higher in the third quarter of 2020 and 3.6% higher in the second quarter.

Bank of America, Chase and Wells Fargo auto balances stood at $ 168.6 billion as of September 30, up 5.9% from the previous year and 2.4% from the 30 June.

Credit union auto loan balances estimated by CUNA through August showed more modest overall growth. Auto loans totaled $ 400.8 billion, up 4.5% from a year earlier and 1.8% from three months earlier.

At Chase, third-quarter auto loan production was $ 11.5 billion, up 0.9% from the third quarter of 2020 and down 7.3% from the second quarter. At Wells Fargo, third-quarter auto loan production was $ 9.2 billion, up 70% from a year earlier and 10.8% from the second quarter.

Suncoast Credit Union of Tampa, Florida ($ 13.8 billion in assets, 967,798 members) was the fifth largest auto loan among credit unions in June, holding $ 4.2 billion in new car loans and second-hand, up 11.4% over the previous year. It ranks fourth for used car loans with $ 2.9 billion, up 13.6%, and 10th for new cars with $ 1.3 billion, up 6.7%.

Michael Hartman, senior vice president of loans, said Suncoast’s third-quarter auto loan issuance increased 15% in value and 5% in number of vehicles from the previous year.

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“As with most financial institutions, our members are experiencing a lack of vehicle availability due to semiconductor chip shortages,” Hartman said. “Lack of vehicle availability drives up the prices of available vehicles due to the scarcity of the market. This is leading more and more members to delay purchasing their vehicle until inventory becomes more readily available and prices drop. “

Hartman said he expects growth to continue in the fourth quarter, “however, not at the rate we would typically see in a normal market. We are taking advantage of promotions as well as marketing campaigns to maximize opportunities. to meet the auto credit needs of our members.

The nation’s largest credit union, the Navy Federal Credit Union of Vienna, Virginia ($ 147.9 billion in assets, 10.6 million members), is also the largest for new car loans and second hand. It held $ 8.3 billion in new car loans as of June 30, up 19.5% from the previous year, and $ 10.8 billion in used car loans, up 18.3%.

“As the auto industry continues to feel the impact of the global chip and parts shortage, Navy Federal has experienced a steady month-over-month pace in auto loan applications. We are set for a solid year of new and used car round-ups, as well as refinancings, ”said Joe Pendergast, vice president of consumer loans at Navy Federal.

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