MADISON, Wis. — Credit unions have put up an impressive membership growth rate early in the year, but that could settle back down as credit unions reprice their deposit products.
According to the CUNA Mutual Group's July Credit Union Trends Report, approximately 99,000 members joined in May bringing the total membership count to an estimated 90.6 million. That marks a gain of 1.2 million members over the first five months of 2008, said Dave Colby, chief economist with CUNA Mutual. He noted that the gains appear out of line with recent trends and will likely be revised as more details become available.
"Unless [credit unions] fail to lower deposit rates, most of this growth surge will likely be revised away," Colby said. "In 2005, we saw strong gains due to a rapid infusion of indirect borrowers. Our outlook calls for [credit unions] to purge indirect members as their loans pay off and it is very unlikely they will see a rapid replacement of these members, as the vehicle lending outlook remains bleak."
CUNA Mutual is forecasting net membership increases to average just over 930,000 per year through 2010.
As membership numbers continue to climb, credit unions are on a different path. The industry saw a new loss of only 13 credit unions in May, according to initial estimates from CUNA economics and statistics. There are now 8,284 credit unions with a year-to-date decline of 112. Colby said looking at average annual consolidation over the past four years, the movement experiences a decline of 336 institutions per year. Consolidation is expected to accelerate before the end of the year with a net decline of 321 credit unions forecast for 2008.
"Expect the usual small credit union mergers, but a growing number of mid- to large institutions will be merging," Colby said. "Our long-term forecast assumes an environment that is favorable for mergers. An extended soft economic cycle, worsening conditions in the credit markets, and a significant share of senior leadership at credit unions about to retire highlights our environmental assumptions."
–msamaad@cutimes.com
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.