Assets, Shares, Members and Loans near the top for Idaho, Oregon and Washington
NWCUA partner Callahan & Associates breaks down the latest data on the country’s credit unions, showing a strong performance in the Northwest.
Callahan & Associates recently published its 2018 Credit Union Directory, with data and statistics on each of the credit unions in the U.S. The growth of the credit union movement in 2017 is well known and this growth has been consistent over the last few years, resulting in more than 110 million members (approximately a third of the country’s population), $1.4 trillion in assets, and 17.34 percent credit card penetration. The report aggregates data by states, and this is where NWCUA member credit unions continuously shine.
When it comes to the four primary growth measurements—asset, share, loan, and member growth—Idaho consistently ranks close to the top, with Oregon and Washington only single digits behind. Given the strong correlation between member growth and asset growth, credit unions in the Northwest are attracting members who bring their deposits with them. Loan growth in all three states exceeded the national average by a healthy amount. This growth measurement is important, as interest from loans is the single biggest revenue source (typically followed by income from interchange) for credit unions. (Source: 2018 Callahan Credit Union Directory)
Following the four growth metrics are two important ratios, and here is where the Northwest states diverge. The loan-to-share ratio is an important metric to indicate how well a credit union is putting its deposits to work: The higher the ratio, the more interest money loans earn. Yet, the ability to maintain the growth rates of loan activity and the resulting revenues requires funds that can be loaned. As this ratio gets closer to 100 percent, the credit union must start attracting additional funds to loan—either through increased interest on deposits to encourage more savings (i.e., share growth, which is already at very high levels), higher rates on share certificates (CDs), or acquiring secondary market money, usually at a more expensive rate. It will be interesting to see how these credit unions continue their phenomenal growth in 2018.
Finally, another positive development for credit unions of the Northwest is the capital-to-assets ratio—also called net worth. Many credit unions across the country have substantially increased their net worth in order to weather future storms, offering a healthy cushion against future losses, including loan write-offs, revised Current Expected Credit Loss (CECL) requirements, or other negative scenarios. Carrying a high capital ratio could also mean holding dead money. The NCUA’s definition states that a well-capitalized credit union has a 7 percent capital-to-assets ratio. The typical drop in net worth during the Great Recession was about 2 percent, so a capital-to-assets ratio of 9.5 percent is reasonably conservative. This ratio is the average for Idaho credit unions and close to that of Oregon credit unions—49 and 47 respectively).
Credit unions in the Northwest continuously lead the industry, in part due to several large corporate headquarters, a thriving economy that’s not subject to boom and bust cycles, and a highly educated population. There’s no reason to believe that the positive trends won’t continue.
Trellance offers both programmatic and customized marketing campaigns to help credit unions engage their members.
Contact Corina Ruiz, Strategic Partnerships Manager NWCUA at firstname.lastname@example.org to find out more about Trellance.