X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SHREWSBURY, N.J. – It’s almost amazing how statistically similar community and select employee group-based credit unions are, said CUNA Chief Economist Bill Hampel. “They are incredibly similar by size, by net worth, delinquency ratios. They are alike in so many ways,” he said. Although there are only 1,826 community CUs compared to 3,031 SEG-based CUs, the average asset size is very close at $110 million for community CUs and $107.5 million for SEG-based CUS. Asset growth in 2005 did favor the community CUs, but not by much. Community CUs grew by 7%, while SEG-based CUs grew by 5.8%. Membership growth also slightly favored community CUs at 2.9%, compared to 2.2% for SEG-based CUs. There is one statistical area that does explain some of the key differences between the two charters. Operating expenses are consistently higher at community charters (see comparative analysis spread chart). Part of the reasoning, said Hampel, is that community charters have to do more marketing to reach out to existing members and to attract potential members. “You don’t have the communication with employees through SEGs. It’s harder to reach and attract new members. When someone begins working at a company, informing them of the credit union is done by the company’s HR. Community credit unions don’t have that,” said Hampel. Another factor is facility expenses. SEG-based CUs often get cheaper facility space on SEG property, whereas community CUs are on their own. Despite the operating expense advantage of SEG-based CUs, community charters have found a way to make up for it in three primary ways: yield on assets, cost of funds and fee income. Yield on assets at community charters is higher, mainly because they charge slightly higher rates on loans. Their cost of funds was lower by virtue of them paying lower rates on savings. They also charge more on fees. So despite the higher operating costs, net income between the two CU groups is very similar, at 83 basis points for community charters and 86 basis points for SEG-based CUs. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.