MADISON, Wis. — For many credit unions, growing their membership bases and establishing stronger relationships with existing members remained the primary focus.
The industry continued to leave no stone unturned to boost membership. The latest figures show the total count at 90.2 million, according to CUNA Mutual Group's Credit Union Trends Report. During the first ten months of 2007, the nation's credit unions increased membership by 2.0 million. This year-to-date increase is above annual gains in each of the past six years. While year-over-year growth rates are trending up to levels not seen since 2001, gains are expected to slow in 2008.
"If fourth quarter results follow usual seasonal patterns, expect modest gains or even a slight decline in membership counts by year end," said Dave Colby, chief economist at CUNA Mutual.
Recommended For You
Even with above trend membership gains, they are not spilling over to savings or lending growth, Colby noted, adding "without more balances, member increases become an expense driver."
A more detailed look at the sources of growth shows the 500 largest credit unions accounted for 92% of gains through the first three quarters of 2007. Over this same period, 4,533 credit unions, which are 53% of all existing credit unions, posted membership declines including 135 of the top 500. These credit unions held 27% of the movement's assets, Colby said.
Meanwhile, credit union consolidation became more of the norm in 2007. Through October, the credit union count is down by 199. This year-to-date market contraction is well below the year-to-date results experienced over the past four years, Colby said.
"We have not seen any fundamental changes in the environment which would warrant this magnitude of slowdown in consolidation," Colby explained. "Anecdotal evidence suggests merger discussions are on the rise at all asset levels."
The net decline of 28 credit unions in October brought the total market count down to 8,463 institutions. On a year-over-year basis, the decline was 253 credit unions–100 below the average rate of contraction over the past four years.
"[Pressures] from the economic slowdown or possible recession, escalating competition and rising expense burdens will present significant operating and strategic challenges," said Colby on the outlook for 2008. "This is true for all credit unions, but especially the 4,900 [58% of all credit unions] with assets below $20 million.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.
