MADISON, Wis. — The credit union industry topped out 2006 with a 2.3% increase in membership growth, but the depth of those relationships will continue to be key going forward.
The industry finished the year with an estimated 89 million members. The gain of two million members is double over 2005 figures and shows "a significant trend reversal from results over the past five years," according to the December 2006 CUNA Mutual Group's Credit Union Trends Report. The fourth quarter of 2006 saw a 364,000 member gain.
"Current results are exceptional, but as always, growing depth of relationship–shares and/or loans per member–is critical to future success," said Dave Colby, chief economist at CUNA Mutual and author of the report. "Looking forward, we assume 2006 results are not sustainable, but membership gains in excess of one million per year should be achievable."
Meanwhile, CUs under the $10 million in assets mark could face some hard decisions this year. Through the first nine months of 2006, 236 CUs in this category ceased to exist.
"Limited resources, especially management and board time, will force these small CUs into seeking merger partners to gain cost scale or risk depleting member capital just to keep pace with compliance costs," Colby said.
At the end of 2006, there were 8,693 CUs, including the loss of 21 CUs in December. Current results show an average annual decline of 319 CUs per year over the past ten years, according to the report.
"Our initial look forward assumes this trend will accelerate, primarily due to compliance cost pressures, particularly at small institutions," Colby said.
Over the next three years, annual declines could average 338, reducing the total CU count down to fewer than 7,700 by the end of 2009.
"Major external shocks or negative rulings adversely impacting the value of the credit union charter are not included in our forecast," Colby noted. –msamaad@cutimes.com
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