ALEXANDRIA, Va. - Consolidated NCUA first quarter 2000 call report figures for credit unions over $50 million in assets indicated that although the 859 FCUs in the category might have been a bit more profitable than the 647 FISCUs in the class, the FISCUs are growing at a brisker pace, incurring some of the predictable liabilities of that distinction. Experts differ, however, as to whether the FISCU-favorable figures reflect the effects of more favorable chartering and FOM conditions within the state CU system. According to the data, the number of FISCUs grew by 43 over first quarter 1999 totals-either through merger, conversion or asset growth-and total assets for the class increased by $17.3 billion (unadjusted for first quarter additions to the over-$50 million asset class) over March 1999 levels. FCUs in the over-$50 million asset class, however, increased by only nine, with total assets for the class increasing in the comparison period by $7.3 billion (unadjusted). Furthermore, total savings in FISCUs as of March 2000 was $125.1 billion, up 13% over first quarter 1999 figures; but total FCU savings for the period was $166.9 billion, up only 4% over March 1999 figures. FISCUs also showed a greater first quarter increase in membership than FCUs, with FISCUs adding a little over 2 million members (to 22.6 million) in the year while FCUs added only 600,000 (to 30.4 million). In addition, first quarter 2000 figures showed that FCU charge-offs due to bankruptcies declined by the annualized rate of 12.6% to $269.9 million, while FISCU charge-offs decreased by 14.4% to $200.2 million. The number of FCU members filing for bankruptcy, however, decreased by 21% over first quarter 1999 filings to 24,228, while the number of bankrupt FISCU members declined by only 2% in the comparison period to 17,144. Likewise, the amount of loans "subject to bankruptcy" as of March 2000 dropped by 19% for FCUs over first quarter 1999 figures, but increased for FISCUs by 9%. FCUs also registered a slightly higher annualized return-on-average assets (ROAA) of 1.03% for the period as compared with FISCUs' 0.97% annualized ROAA. FISCU first quarter 2000 loans, however, were 22% higher than they were for the previous first quarter with an estimated annualized 2000 loan growth rate of 10%, while FCUs had a 9% loan growth increase over the previous first quarter with an estimated annualized 2000 rate of 6.4%. FISCUs, furthermore, had a 77.1% loan-to-share ratio while FCUs had a 73.7% ratio. First quarter net capital for FCUs, however, was 10.6% while FISCUs had a 10.4% net capital ratio. Total capital for the two groups, according to the NCUA data, was almost identical at 11.1% and 11.0% respectively. FISCUs, however, logged an 85% increase in interactive web sites over last year's first quarter number to 330, while the FCU rate of increase was 60% (unadjusted) to 437. "What I would say qualitatively about this," said CUNA Economist Bill Hampel of the data, "is that large credit unions continue to do really well in the first quarter of this year-both federal and state. Their basic financial performance was almost indistinguishable from each other, except the state charters grew just slightly faster than the federals." It was a point that NAFCU Economist Lisa Ryu agreed with. "The issue of the federal charter...is broader than this," Hampel went on, addressing possible FCU/FISCU charter disparity implications in the first quarter data, "and it has to do with powers and field of membership. Over the last three months, charter differences don't show up in the financial performance of these credit unions." "If state-chartered credit unions have greater field of membership options in the long run, they'll have greater growth potential in the long run. (But) I don't think that the field of membership differences are what contributed to faster growth of the state versus federals in the first three months. You see, three months is so short. If at the end of a year, we're still seeing this, then that's something...." Hampel conceded, however, that if the first quarter figures reflect a continuing trend, chartering and FOM advantages could indeed be the cause of the discrepancy-which is exactly the point of NASCUS President Doug Duerr, who has been tracking FISCU growth vis-a-vis that of FCUs for the past two years. "Those (figure disparities) to me are indicative of small employee groups (that more can come more easily into FISCUs)," said Duerr. "They're indicative of field of membership issues. What I know is that generally when a credit union takes in a small employee group, what it attracts are people who are interested in borrowing. Some get some new depositors out of it, but your initial draw is from people who have a pent-up loan demand." "So when I see loan growth (so divergent between FCUs and FISCUs)...what that says to me (as a cause) is...field of membership. That's not (from) marketing; that's not your advertising program...." "I've been talking about this (disparity) for the last 24 months," Duerr continued, "suggesting that these figures should be an alarm to the federal credit union system." -
gmcorrigan@mindspring.com
