Q2 Report: Michigan Credit Unions Respond to State of Emergency as Financial First Responders
Credit union membership and loan growth remains steady as COVID-19-related recession hits; provide small business assistance and community outreach during state shutdown.
Following state of emergency orders at both the state and federal level in March, the second quarter of 2020 started at the beginning of a national recession and statewide shutdown. The COVID-19 pandemic, and safety measures enacted as a result, led to Michigan’s unemployment rate peaking in April at 24%.
However, year-over-year memberships in Michigan grew by 1.8%. During this sharp economic decline, Michigan credit unions experienced this steady 0.5% second quarter growth while acting as financial first responders to 5.6 million members.
As financial first responders, credit unions remained open, ready to provide relief options to the many members suddenly struggling to make a rent or mortgage payment or keep food on the table. These assistance programs freed up income so members could cover necessary expenses without penalty.
Money saved (by program):
- 260,000 skip-a-pays on over $1 billion in loans
- 80,000 auto loan modifications totaling $800 million in loans
- Over 15,000 mortgage loan modifications on $2 billion in mortgage loans
- 10,000 unsecured emergency loans totaling $24 million
- 600,000 fee waivers totaling $12.7 million
- Over 10,000 PPP loans totalling $600 million
In Q2, Michigan credit unions also focused on helping small business owners through the pandemic’s initial struggles. Many rapidly mobilized to become approved lenders by the Small Business Administration to assist members with their Paycheck Protection Program, a federal aid program to cover small business expenses and payroll during the state of emergency. With the assistance of Michigan credit unions, more than 10,000 small business owners accessed $600 million in loans to help their operations make it through the pandemic. Further, 10% of these loans were given to new or non-members who turned to a credit union after being turned away by other lenders.
“During the second quarter of 2020, Michigan credit unions did what they’ve charged themselves with doing: be a beacon for their community, providing financial relief to those most in need,” said MCUL CEO Dave Adams. “But these numbers, while impressive, are only a part of the picture. These financial first responders found so many other ways to serve members through things like community outreach and fundraising. This quarter, the Michigan credit union movement proved to its 5.6 million members that, during an unprecedented emergency, they have a financial partner they can count on.”
Michigan credit union loan portfolios grew by 2.9% in the second quarter, which makes for a 11.6% annualized pace. That’s about four times faster than the first quarter increase and faster than the 2.6% increase reported at the same time in 2019. Year-over-year loan growth came in at 7.7%.
Q2 loan growth (by type):
- Small business loans: 14.5%
- First mortgages: 13.1%
- Home equity/2nd mortgages: 0.2%
- Other unsecured loans: 28.1%
CUNA’s Member Benefits Report for Q2 2020 shows that Michigan credit unions contributed to a total of $406.6 million in direct financial benefits to Michigan’s 5.6 million members over the previous twelve months. This is equal to $74 per member or $156 million per member household.
These figures are calculated based on average savings differences between credit union and bank pricing. They result from financial benefits, such as higher CD rates and fee-free checking, as well as lower rates and fees on products like home, car and auto loans.
Find the complete Q2 2020 NCUA Call Report Data here.
You can also find more Q2 data on Michigan credit unions’ low rates and high dividends in the Q2 Member Benefits Report.