Over the last two decades, the credit union sector has expanded rapidly in the Third District states — Delaware, New Jersey, and Pennsylvania. Inflation-adjusted lending has grown by 122.7 percent and assets by 86.9 percent since 2004. This growth has important implications for consumer credit access, notably among underserved people and communities.
This report examines recent trends in the growth and performance of credit unions compared with traditional banks, particularly small banks, across the Third District. Among the key findings:
- Credit unions have emerged as a key source of consumer finance. They have broadened their presence beyond their traditional markets of real estate and auto lending into sectors in which they historically haven’t specialized, such as commercial lending.
- There are unanswered questions related to the roles of credit unions in promoting financial access among underserved communities. While credit unions maintain a stronger branch presence in low- and moderate-income communities and originated a larger share of purchase mortgages in majority-minority communities compared with small banks, they originated a smaller share of mortgages in LMI neighborhoods than small banks. They also have higher mortgage rejection rates in LMI and majority-minority neighborhoods.
The substantial transformation of the credit union industry over the past 20 years has resulted in credit unions playing an increasingly important role in financial markets. This brief provides insights into how the expansion of credit unions presents an opportunity to improve access to credit and financial services for lower-income families as credit unions continue to grow and evolve beyond their traditional niche — although their expanding role in shaping access to credit and financial services warrants closer attention.
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