Membership Growth May Be Tied to Those Seeking a Depository Safe Haven
"Looking at deposit yield detail, we see no significant change in relative CU rate competitiveness, which would draw in a large number of new depositors," wrote CUNA Mutual Chief Economist Dave Colby in the company's November "Credit Union Trends Report." Still, "Some of the current increase is likely due to the 'safe haven of insured deposits' effect."
The year-to-date membership gain is 2.1 million, according to the report. At 92.8 million, total membership is up 701,000 in just the past two months and 1.7 million over the past year.
Tracking activity over the last three years, membership has declined in the fourth quarter, Colby wrote. This year will follow a similar pattern as tight budgets imply less marketing and fewer select employee group additions, according to the report. The view is a little clouded looking ahead, Colby noted, saying "Our models indicate slower growth over the next few years, but uncertainty in the entire banking system could lead more consumers to the nation's CUs."
Meanwhile, the fallout from the recession continues to trigger more credit union mergers. There was a loss of 29 credit unions in September, which brought the total industry count to 7,898 according to the report. Through the first three quarters of 2009, the CU count declined by 190 institutions. The current rate of consolidation is well below both its long-term trend rate and 2008 results, the data showed.
On a year-over-year basis, the industry has lost 282 CUs. It now appears that 2009 will be the third consecutive year of below trend consolation, Colby noted. Looking out into 2010, mergers and liquidations of troubled CUs may pick up from its current path and strategic mergers accelerating, as healthy CUs become more confident in their capital levels, he added.
"The combined stresses of the deep recession, credit quality challenges, and share insurance assessments have triggered more mergers due to financial problems but fewer strategic combinations. We define strategic combinations as mergers which improve economies of scale, achieve economic and/or geographic diversification and/or add mutually beneficial fields of membership," the trends report read.