Aggregate household debt is quickly approaching the $18 trillion mark, with balances $3.8 trillion higher today than just before the pandemic. While the majority of that increase falls into mortgage categories, roughly $65 billion was incurred via non-housing related consumer loans.

The majority of these loans are current, but there is a growing segment of banks experiencing higher delinquency rates in either consumer loans as a whole, or credit card loans, as a sub-set. We have listed 52 such banks on page 5 of this issue. These should not be confused with the 7 largest credit card lenders (below) which account for nearly 80% of industry credit card loans.

Consumer Debt Shows Remarkable Resilience

According to the Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data, aggregate household debt increased by $147 billion in the third quarter 2024. That is just a 0.8% rise from second quarter 2024, but at $17.94 trillion, balances are now $3.8 trillion higher than at the end of 2019 (right before the pandemic).

Over half of the third quarter increase ($75 billion) went to mortgage balances and another $7 billion to home equity lines. That leaves $65 billion of non-housing related debt incurred during the third quarter. This represents a much higher rise from second quarter and will be our focus today.

That leads us to our list of banks on page 5. To begin with, each of the 52 banks on page 5 had more than $1 million outstanding in consumer loans at September 30, 2024 and is rated less than 4-Star by Bauer. At least 1.6% of either total consumer loans, or the credit card subset of consumer loans, was 90 days or more delinquent or in nonaccrual  status at the close of Q3 2024.

With millions of eyes focusing on Caesars Superdome in Louisiana’s Crescent City this weekend for Super Bowl 59, we felt it made sense to begin with 3-Star Crescent Bank, New Orleans, LA (33492).

Established in 1991 to offer  personal and business banking services to the Greater New Orleans area, Crescent Bank now provides auto loans to consumers across 32 states. Crescent Bank’s loan portfolio is comprised “almost” entirely of auto loans (over 99%).

At September 30, 2024, delinquent auto loans (90 days or more past due plus nonaccrual) totaled $31.7 million. Those between 30 and 89 days past due accounted for $190.7 million. During calendar 2024, Crescent Bank charged-off $154   million in auto loans (almost $9 million more than the previous year).

Delinquent auto loans at Crescent Bank increased 11 basis points over the 12 months ended 9/30/2024—from 3.05% to 3.16%. Since Crescent Bank’s auto loans span 32 states, we believe it is representative of the auto loan industry nationwide.

Now let’s take a look at a credit card lender. 3½-Star Comenity Capital Bank, Draper, UT (57570) is a credit card bank. Where Crescent Bank demonstrates how car loans are faring, Comenity Capital Bank, with partners like Ulta Beauty and AAA, should give us an idea of what’s  happening with credit card loans.

In fact, whether you are rooting for the Kansas City Chiefs or the Philadelphia Eagles, Comenity Capital Bank has an affiliate NFL Extra Points Visa® credit card designed for football fans.

You may notice two Comenity Banks on page 5, but we are focusing on the larger affiliate, Comenity Capital Bank in Utah. The banks are similar, but  loans and deposit accounts applied for or opened via their website (breadfinancial.com), are at Comenity Capital Bank in Utah.

At September 30, 2024, Comenity Capital Bank reported total assets of $12.59 billion, $10.96 billion of which is loans—almost entirely credit card loans. A year ago,  delinquent credit cards represented 4.11% of the total, but have increased to represent  4.25%. That’s not what we want to see, but, is it indicative of all bank credit cards?

The short answer is, “No”. The seven banks below (soon to be six*) hold almost 80% of all bank credit card balances in the country. Delinquent balances at these banks range from 0.74% (American Express) to 2.88% (Capital One) for an average credit card delinquency rate of 1.69%. The nationwide average is just slightly higher, which is clearly well below the 4.25% of Comenity.

*Capital One’s acquisition of Discover Bank, which was announced last February (JRN 41:09), is expected to happen quickly after a shareholder meeting that is coming up on February 18th. That will put Capital One well above JPMorgan Chase as the #1 credit card lender in the nation.

There is one other segment of lenders that we’d like to address: 9 of the 52 banks on page 5 specialize in agriculture loans. 3½-Star State Bank of Toledo, IA (4514) is one such bank. The county seat of Tama County, Iowa,  Toledo’s population is less than 2,400.

Established in 1927, State Bank of Toledo is the only bank in town. It’s no wonder the bank has a hometown focus. Total assets are about $133 million with loans representing about 80% of that. State Bank of Toledo has just about every type of loan you could ask for, but the biggest slice goes to farmers. We love those who care for our farmers.