PLANO, Texas—Credit union growth continued to diverge sharply by size in the third quarter, with larger institutions pulling further ahead as smaller credit unions struggled with declining shares, loan contraction, and mounting credit stress, according to new Q3 2025 peer data analyzed by Brian Turner, president and chief economist at Meridian Economics.
Credit unions with more than $500 million in assets posted a 5.1% increase in shares and 5.5% loan growth, while institutions under $500 million saw shares fall 1% and loans decline 1.8%. Total industry share growth stood at 4.3%, with loan growth at 4.6%, Turner said.
Despite improving earnings, asset quality continued to deteriorate. The industry recorded its third consecutive year of doubling in both delinquencies and net charge-offs—a trend Turner characterized as a rising “misery index.” Net operating returns improved across nearly all asset classes, with the exception of the smallest credit unions under $2 million in assets.
Deposit composition continued to shift as members tapped savings to manage higher everyday costs. Core deposits accounted for 47% of total deposits in the third quarter, down from 48% a year earlier, 50% in 2023, and 56% in 2022. Auto lending also continued to retreat, with vehicle loans representing 28% of total loans, down from 29% last year and 31% in 2023.
Liquidity metrics weakened further. Liquid assets fell to 6.7% of total assets—the lowest level since 2008—while the short-term funding ratio dropped to 11.9%, the weakest reading since 2018. The combination of deposit volatility, slowing loan growth, and rising credit risk poses a growing threat to future liquidity, Turner warned.
As a result, Meridian Economics continues to flag three priority risk areas for credit unions: credit risk mitigation, liquidity management—particularly mismatches between share and loan growth—and preservation of net worth.