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The COVID-19 pandemic pushed the economy into what was, by some measures, the worst contraction on record, but consumer lending trends did not deteriorate as they usually do during a recession. While credit card loan balances remained below the pre-recession level through fourth quarter 2021, auto loans and other consumer loans grew throughout 2020 and 2021. Performance of all types of bank consumer loans improved because of government support, forbearance programs, and tighter underwriting standards for new loans, according to a new FDIC report, “Consumer Lending Through the Pandemic and the Recovery,” published in the FDIC Quarterly.
The FDIC found that:
- Government support programs bolstered income, helping to support households through the swift contraction at the start of the pandemic.
- Credit card loan balances declined in 2020 and in fourth quarter 2021 were still below pre-pandemic levels.
- Auto loans and other consumer loans grew throughout 2020 and 2021.
- Unlike in previous recessions, loan performance measures improved for all three consumer loan types between 2019 and 2021.
The combined effects of the COVID-19 pandemic, changing spending patterns, and government stimulus programs bolstered deposit levels and accelerated net branch closures of insured depository institutions in the year ending June 30, 2021. Deposit growth rates moderated compared with the record highs reported in 2020, and the decline in the number of branches accelerated. As the number of branches has declined, many bank customers have reported increased use of mobile banking applications to perform routine banking transactions, according to the FDIC report, “2021 Summary of Deposits Highlights,” published in the FDIC Quarterly.
The FDIC found that, in the year ending June 30, 2021:
- Deposit growth rates for the banking industry continued to exceed pre-pandemic growth rates but at a moderated pace compared with the previous year.
- Community banks reported higher deposit growth compared with noncommunity banks.
- Deposit growth was widespread across census categories and lending specializations except credit card lending.
- Branches of noncommunity banks closed at a higher rate compared with community banks, underscoring the continued importance of community banks.
- Minority depository institutions reported a merger-adjusted net gain in branches, as they continued to serve an important role in the banking industry.
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