Delinquencies and Charge-Offs Soar at Credit Unions

An Unprecedented Rise in Risk Metrics Signals Trouble Ahead

Credit unions with assets over $1 billion are facing a concerning reality: delinquency rates and charge-offs have not only returned to pre-pandemic levels but have quickly surpassed decade-long highs. Our analysis of quarterly call reports submitted to the National Credit Union Administration (NCUA) from 452 credit unions with assets over $1 billion reveals a troubling trajectory that demands industry attention.

Delinquency Rates Reach Historic Highs

The data tells a stark story: 60-day delinquencies have increased by a staggering 276% since their all-time low in Q3 2021. From a historically low rate of 0.34% in late 2021, delinquencies climbed to 0.94% by Q4 2024, significantly exceeding the pre-COVID high of 0.76% recorded in Q4 2017.

The progression shows a clear and concerning upward trend:

• Q4 2021: 0.45%
• Q4 2022: 0.64%
• Q4 2023: 0.85%
• Q4 2024: 0.94%

This steady climb indicates that what many hoped would be a temporary post-pandemic adjustment has instead become a persistent and worsening pattern affecting even the largest and presumably most stable credit unions.

Auto Loans: The Epicenter of Risk

Our analysis focused specifically on auto loan portfolios, which represents a significant portion of credit union lending. The deterioration in this sector raises particular concerns, as many credit unions achieved record growth in auto lending during 2021-2022, with the industry briefly capturing the largest market share in auto financing for the first time in Q4 2022.

That achievement now appears to have come at a cost. The subsequent pullback in market share over the past two years reflects a growing recognition within the industry that rapid expansion, particularly through indirect lending channels, brought elevated risk that is now materializing on balance sheets.

Charge-Offs: A $4 Billion Problem

Even more alarming than the delinquency figures is the dramatic increase in charge-offs. Total charge-offs reached over $4 billion in 2024, compared to just $1.1 billion in Q4 2021. While some of this increase reflects accounting changes due to the implementation of the Current Expected Credit Losses (CECL) standard, the magnitude of the increase still points to significant credit deterioration.

The charge-off rate related to outstanding balances has nearly tripled from 0.37% in Q4 2021 to 1.09% in Q4 2024, creating substantial pressure on earnings and forcing many credit unions to reassess their lending strategies.

Size Matters: The $20 Billion Threshold

Our analysis reveals an important nuance: while the trend of increasing delinquencies is evident across all billion-dollar credit unions, those with assets exceeding $20 billion are experiencing significantly higher delinquency rates than their smaller counterparts.

This divergence suggests that the largest institutions, which often have broader field of membership and may serve more diverse member populations, are facing greater challenges in maintaining credit quality in the current economic environment.

The Hidden Fraud Factor

Perhaps most concerning is what traditional delinquency metrics may be masking. Recent studies by Point Predictive indicate that up to 70% of early payment delinquencies in auto loans stem from fraud and misrepresentation that credit unions failed to detect during the origination process.

Although standard third-party fraud risks are of concern to credit unions, what often goes missed is the first-party fraud. Members that may be telling the truth about who they are but are materially misrepresenting other information on applications that influences a credit union’s decision. Their intentions may be pure, but the result is often the same…default.

According to Point Predictive’s 2025 Annual Fraud Report, which analyzed over 250 million applications, first party fraud accounted for 69% of fraud losses assumed by auto lenders. This fraud is broken down into many different categories:

These fraud-related losses are typically captured within broader credit loss metrics, obscuring their true nature and making it difficult for institutions to implement targeted strategies. This blending of fraud and credit risk has created a dangerous blind spot for many credit unions.

Strategic Shifts: Tightening the Credit Box

In response to these troubling trends, credit unions are making significant strategic adjustments. Many are pulling back from indirect lending channels, which historically have shown higher delinquency rates compared to direct lending relationships. Others are tightening underwriting standards across all channels, reducing their appetite for lower credit tiers that performed adequately during the favorable credit environment of the past decade but are now showing significant stress.

This credit tightening, while prudent for individual institutions, raises broader concerns about access to affordable financing for credit-challenged consumers who have traditionally been served by the credit union mission of financial inclusion.

Looking Ahead: No Quick Turnaround in Sight

The consistent upward trajectory of delinquencies over the past three years suggests that this trend is unlikely to reverse in the near term. Economic pressures on households, including persistent (albeit declining) inflation and elevated interest rates, continue to strain many members’ ability to meet their financial obligations.

Credit unions that expanded rapidly during the low-rate environment now face a challenging period of portfolio management and potential contraction in certain lending categories. The focus has necessarily shifted from growth to risk mitigation and loss containment.

Implications for the Industry

For credit union executives and boards, these findings underscore the need for:

1. Enhanced fraud detection capabilities, particularly in auto lending channels. AutoPass™ from Point Predictive protects credit unions from all forms of auto lending risk.
2. Reassessment of indirect lending relationships and associated controls. Point Predictive sees applications from more than 45,000 dealerships a month. DealerCheck™ provides credit unions a way to intuitively monitor their indirect dealer networks.
3. More sophisticated early intervention strategies for potentially troubled loans. Point Predictive’s Case Manager gives credit unions a simple and interactive way to investigate, manage, and respond to fraud claims.
4. Development of member assistance programs that can help prevent delinquencies from progressing to charge-offs.
5. Increased investment in collections infrastructure and expertise.

As the industry navigates these challenges, the credit unions that will emerge strongest are those that can effectively balance their mission of member service with prudent risk management practices appropriate for an increasingly complex economic environment.

Author: Justin Davis. Connect with Justin on Linkedin.

This analysis is based on quarterly call report data submitted to the National Credit Union Administration (NCUA) by 452 credit unions with assets over $1 billion. The period analyzed spans from 2014 through Q4 2024, with particular focus on auto loan portfolios.