New Members Continue to Join Credit Unions, Latest Data Shows

MADISON, Wis. – An additional 305,000 members joined credit unions in February. Year to date, membership has increased by 505,000, according to CUNA Mutual Group's just-released Credit Union Trends Report, bringing the year-over-year increase back above the million member mark. Looking at the rest of the year, a "modest growth improvement" may occur as credit unions begin to tap expanded fields of membership including underserved areas, said David Colby, chief economist for CUNA Mutual. "Countering new member gains will be runoff of indirect-only borrowers, improved accounting systems which produce lower, but more accurate membership counts and assisted attrition of inactive, low-balance members," according to Colby, who compiled the report. At the end of February, CUNA Economics and Statistics data showed 8,961 credit unions. This reflects a net decline of 54 credit unions in the first two months of 2006. The residual loss of small credit unions in 2005′s hurricane season impact zones and the costs associated with "mounting regulatory compliance burdens" are pushing more small credit unions into investigating mergers with larger institutions as a means to preserve member value, Colby said. Year-end data revisions had a significant negative impact on both total membership counts and the overall growth trend, Colby pointed out. The semi-annual benchmark revisions by CUNA Economics and Statistics data showed roughly 500,000 fewer members than previously reported. This revision reduced the annual growth rate to 1.1%. Current data shows the industry actually finished 2005 with 87.0 million members reflecting little or no change from mid-year results and an annual gain just under one million members. In other areas, credit unions had $202 billion in surplus funds at the end of February. This was $21 billion below the February 2005 level, the report said. Roughly 28.7% of all assets are in surplus funds and 57.5% of all surplus funds are scheduled to mature in one year or less. "Traditionally, [credit unions] experience a seasonal inflow of deposits from tax refunds, bonus payments and IRA contributions," Colby said. "A large share of these inflows will be temporary. We believe the liquid share will begin to recede by late in the second quarter as [credit unions] will gain investment yield advantages by extending maturities." -msamaad@cutimes.com