MADISON, Wis. — The industry saw an unusual, late-year surge of 367,000 members in the fourth quarter last year, allowing credit unions to cap off 2007 with a total of 89.7 million members, according to the latest Credit Union Trends Report from CUNA Mutual Group.
The gain is well above the trends exhibited over the past three years and 400,000 above CUNA Mutual's previous 2007 forecast, according to Chief Economist Dave Colby. In December alone, membership increased by 170,000, in contrast with the declines reported in three of the past four years.
While NCUA's data shows 37.4 million potential members were added in 2007 through field of membership expansions, Colby cautioned "there is redundancy in FOM expansions as-well-as in total membership estimates."
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"The economic uncertainty in 2008 and 2009 [may lead to] fewer new members as households are reluctant to switch financial relations during an economic downturn," Colby said, adding membership growth through 2010 may be also be impacted if credit unions "aggressively [cull] low balance [and] inactive accounts to cut costs" as margins continue to be squeezed. Colby estimates by 2010, CU membership will top 92 million.
All the same, CUNA Mutual's first look at year-end estimates shows a net decline of 236 credit unions in 2007. Credit union membership came in at 117 below 2006 results and 86 below the long-term average rate of decline. At year-end 2007, CUNA's Economics & Statistics reported 8,426 credit unions, including a net loss of 17 credit unions in December.
"We continue to believe merger planning [and] execution has temporarily been moved to the 'back-burner' as management resources are focused on current environmental challenges," Colby said. "Our initial look forward assumes we remain in reduced merger activity mode, but market pressures [may] quicken the pace of consolidation in 2008."
Although declines are expected to remain below-trend through 2009, overall consolidation averages 325 credit unions per year over CUNA Mutual's forecast horizon, Colby said. Mergers discussed in 2008 and 2009 "will come to fruition" in 2010. Under this baseline scenario, the number of credit unions at year-end 2010 will equal 7,451–almost 12% below today's level, he added.
"Major external shocks or adverse rulings negatively impacting the overall value of a credit union charter are not included in this forecast," Colby pointed out.
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