During the 12 months ended March 31, 2021, credit card loans outstanding from the nation’s banks dropped a stunning 12.8%, and an even more notable 19.2% lower than their peak at the close of 2019. Preliminary reports suggest that downward trend may have come to an end.
When we look at the nation’s credit card specialized banks, we see that 10 out of 11 posted year-over-year declines. Two of them: 5-Star Barclays Bank Delaware, out of Wilmington and 3½-Star Comenity Bank, also of Wilmington, DE, reported declines in excess of 22%. The only credit card bank reporting an increase was 5-Star Credit One Bank, NA, Las Vegas, NV which registered 7.9% growth.
Removing credit card banks and other Big Banks from the equation, credit card balances at community banks passed the $2 billion mark at year-end 2020 but dropped back down to $1.881 billion at March 31st. That marked a 5.5% year-over-year drop. On page 7, we have listed 50 community banks that not only posted gains in credit card balances, they did so with gusto; each posting more than 21% growth.
We are going to take a closer look at a few of them and we do have the added benefit of preliminary June 30th data. (Our analysts are busy at work and we hope to have new bank ratings for you next week.)
The first bank listed on page 7 was a community bank up until it filed its June 30th call report. Based on March 31st data, 3½-Star Stride Bank, N.A., Enid, OK was a community bank reporting a nearly 3000% increase in credit card balances. Three months later, the now non-community bank has dwarfed that level and increased its credit cards from $120 million to $500 million. It has clearly had a change in its modus operandi.
That is not the case for 4-Star Lead Bank, Kansas City, MO, the second bank on page 7. Lead Bank reported a 530% year-over-year increase bringing outstanding credit card balances to $67.2 million. A preliminary look at June numbers indicates that number is now up to $112 million.
Lead Bank is a TRUE community bank, defining its success by the success of the people it serves.
Another true community bank, 5-Star State Bank of Chilton, WI had a comparatively small $82,000 outstanding in credit card loans while helping its neighbors get through this COVID mess. But that was a big jump from the previous March, and it proves how eager the bank is to help out its neighbors. State Bank of Chilton realizes that money makes pretty much every part of our day possible, so it is there to lend when the community most needs it.
With over $2 billion in assets, 5-Star Montecito Bank & Trust, Santa Barbara, CA is larger than many community banks, but its focus is the same. Montecito B&T was started in 1975 by a group of local businessmen who saw a need for a bank committed to the local community.
While it can be argued that the bank favors local business over local consumers (since its loans consist of 47% Commercial Real Estate (CRE) and 28% Commercial & Industrial (C&I)) the fact that it stepped up when local individuals were in need puts an end to that notion. While credit cards still account for a very small percentage of its loan portfolio, they increased by 235% over the 12 month period ending March 31st.
Peeking at June 30th numbers suggests Montecito’s credit card balance growth is continuing, but perhaps at a slower rate.
While many consumers were busy paying off credit card debt during the pandemic, not everyone was as fortunate. Those who were not, did better when they had a relationship with a community bank. It’s the best, and sometimes the only, way to get through the tough times.