The handful of financial consulting firms that track national and individual credit union data is getting some competition this month from a North Carolina firm in the area of publishing health score trends on a wider scale.
Glatt Consulting LLC of Wilmington said the heightened interest in financial conditions of U.S. credit unions, both big and small, has generated the need for broader distribution of subscriber data that in some instances is trumpeted in CU ads. BauerFinancial ratings and Callahan Associates data are frequently part of CU marketing toolkits.
One key finding of its trademarked "HealthScores" product, said Tom Glatt Jr., head of the firm, is a second-quarter drop in CU performance.
"While the credit union community has seen improvement in scores on credit quality, efficiency and expense management, there have been significant declines in earnings and growth, which is combining to drive down the aggregate score," said Glatt.
The latest statistics as drawn from the firm's research and covering such areas as capital, asset quality, liquidity and more, show an overall 2.377% HealthScore ranking in the second quarter, a 1.70% drop from the first quarter and a sharp 6.74% decline from the same period a year ago.
The Glatt firm computes its composite HealthScore data for client CUs on a 5-point scale with 5 as most healthy and 0 as least healthy.
Glatt, who is the son of the ex-president/CEO of Realtors FCU, said also the second-quarter HealthScore data does show that while throttling asset growth has helped some CUs minimize net worth degradation and slow the decline in net worth scores, "the strategy may be having a negative impact on public perception regarding the value of credit union relationships."
Commenting on the planned merger of Navy Federal CU and ailing USA Fed CU of San Diego, Glatt said he was surprised the deal had not been completed two years ago based on USA Fed's gloomy record.
"USA's problems began before this recession kicked into high gear, and I think they should have begun looking at partners much earlier, perhaps as early as first-quarter 2008," said Glatt, adding that "this looks like a great deal for Navy FCU-they expanded their San Diego presence at minimal cost."
Glatt took issue with the opinion that USA Fed was a victim of the recession and erred in returning more of its profits to members rather than putting them aside to enhance its capital base.
"You can return profits to members above the average for the industry and still be successful in a down economy so long as your member value proposition and operating structure support that strategy," said Glatt.