San Diego area record savings to support 2021 economy
See + Do Local consumers continue to choose credit unions during pandemic
Wednesday March 31, 20210
A record increase in savings deposits at local San Diego area credit unions will play a key role in economic growth and consumer spending as the second quarter of 2021 kicks off, experts say the economy is on the verge of surpassing initial expectations. Meanwhile, the last fourth quarter of 2020 Overview of San Diego Area Credit Unions the data was released today by the California Credit Union League.
A third round of relief and stimulus payments from the US Congress has already arrived on the personal balance sheets of local households, in addition to the second round in December 2020. Low-income individuals and families will spend far more of these dollars than wages higher. workers and households.
However, many economists predict that ALL consumer / household income levels could likely spend money at faster rates (in total) than the first two rounds of federal payments last year since the business, sale retail, local COVID-19 events and gatherings. restrictions are steadily easing (in combination with faster growth in local employment). This is on top of paying off debt and saving money.
Simultaneously, the year-over-year deposit and loan trends of San Diego area credit unions at the end of the fourth quarter of 2020 revealed the following: Consumer deposits continued to rise sharply, as well as business loans (commercial mortgages and mortgage loans to residential owners). ).
Local / regional snapshots: members, loans, deposits
In the San Diego area, credit union membership and total deposits reached record levels on December 31, 2020 compared to the previous year – 1.2 million members and $ 19.4 billion in deposits (and $ 13 billion in loans).
(For trends broken down by 10 local regions, click here -> Bay area, California, Central coast, Central valley, Great Napa Valley, Northern California, Sacramento County, San Diego area, Southern california, and Ventura County)
Joining a credit union in the San Diego area (18 credit unions with local headquarters) in the fourth quarter of 2020 found that:
The number of members reached 1.2 million (3% increase or 36,300 new members); hit a record.
This trend, driven by “new” consumers choosing credit unions as their financial service providers and existing members becoming new members of other credit unions, has not stopped.
Owners and vehicle owners looking to refinance their loans while interest rates remain in historically low territory have encouraged the influx of some consumers becoming new members, as well as emergency loans offered throughout. the COVID-19 pandemic.
Small business owners scramble for the latest round of Paycheck Protection Program (PPP) forgivable loans issued by the United States Small Business Administration and the Treasury Department also played a role in the creation of new members, but not as much as the previous quarter (third quarter) since at the end of the fourth quarter, much of those congressional funds were nearing depletion.
Deposits from credit unions in the San Diego area in the fourth quarter of 2020 showed that:
Total deposits reached $ 19.4 billion (20% increase); hit a record.
For the most part, chequing and savings accounts have experienced the highest growth rates. In many cases, the regional percentage increase was between 20 and 30 percent, with some areas in the 40 percent range. The impact of deposits on the decline in loan-to-deposit ratios at credit unions across all regions (also known as the loan-to-equity ratio) is significant, making the industry more ‘liquid’ than before the pandemic ( inquire for more details).
This increase in consumer deposits came from less spending and more savings on the part of many existing members and even new members, aided by federal funds received by suddenly jobless workers / households and qualified for payment of funds. ‘Extended / Continuing Unemployment Insurance and Supplementary Unemployment Insurance Payments in the event of an emergency pandemic. . Additionally, many Congressional relief / stimulus funds deposited earlier in the year by employed members (and even some unemployed) were not fully spent by the end of December 2020.
Loans to credit unions in the San Diego area in the fourth quarter of 2020 showed that:
Total loans fell to $ 13 billion (-10% decline).
Senior mortgages of all types (fixed rate, adjustable rate, etc.) have been the main sub-drivers of the much larger growth in total / general loans as mortgage rates have remained historically low and homeowners have refinanced into new mortgages with lower monthly interest charges. The positive impact of this category cannot be overstated.
The growth of business loans (including mortgage lending to lessors) in many regions has helped, as PPP loans have been made easier for local business owners looking to ease payroll / employee costs, but not at the same pace than the previous quarter (third quarter).
The fact that the growth of used auto loans has not declined as much as other loan categories (depending on the region) – or in some cases has seen no percentage change or even slightly positive growth – also helped to support and cushion total / aggregate lending trends. The prices of used vehicles relative to new cars, combined with very low interest rates, make used cars and trucks relatively much more attractive to some buyers during the economic recovery.
Three categories of loans have declined significantly as continued pandemic closures and / or restrictions from local / state governments halted economic activity: Home Equity / HELOC, Credit Cards, and New Loans of motor vehicles.
* Please note: some prominent trends may or may not be fully applicable to a local region. Check your region’s report (link above) for exact data.
Stay Healthy, San Diego!