Skip to main content

Steve Rick - Small CUs Beating Big CUs In Key Performance Area

MADISON, Wis.—The current rate environment, for a change, may actually be favoring small CUs, data from TruStage’s latest Trends Report show.

The September Trends Report, which is based on CU performance through July, reveals the credit union return-on-asset ratio fell to 0.66% in the first six months of 2024, on an annualized basis, down from 0.78% in the first six months of 2023.

The 12-basis point decrease in earnings during the last year was driven by a 15-basis point increase in provisions for loan losses as a percent of average assets, and a 7-basis point increase in operating expense ratios, the report states.

T equity and other

Higher Earnings

Partially offsetting the expense increase was a 3-basis point increase in net interest margins and a 6-basis point increase in fee and other income ratios. Credit unions with assets greater than $50 million reported a drop in earnings while smaller credit unions reported higher earnings due to the difference in the increase in their cost of funds ratios.

RickSteve New

Steve Rick

“For example, billion-dollar credit unions saw their cost of funds ratios rise from 1.33% during the first half of 2023, to 2.03% in the first half of 2024, a 70-basis point increase. Meanwhile, credit unions with assets less than $20 million saw their cost of funds increase from 0.45% in 2023 to 0.81% in 2024, a 36-basis point increase,” wrote TruStage Chief Economist Steven Rick. “This cost of funds disparity is due to bigger credit unions relying more on higher-cost money market and certificates of deposit accounts for funding. So, for the first time in many years, these smaller credit unions reported a return-on-asset ratio similar to the billion-dollar credit unions.”

Membership Growth

Aside from rates, small shops continued to struggle, particularly with membership growth. Credit union memberships grew 0.1% in July 2024, below the 0.4% reported in July 2023, due to a significant reduction in auto loan originations and slower job growth. On an annual growth rate basis, memberships are up only 1.2% in the year ending in July 2024, below the 4.3% pace set in the year ending in July 2023. ‘

“This 1.2% pace is the slowest since the tail end of the Great Recession in November 2011. The membership growth slowdown was partially driven by the 2.4 million jobs gained during the last year, according to the Bureau of Labor Statistics, which is below the 3.2 million jobs gained in the year ending in July 2023,” Rick wrote.

The slowdown in membership growth in 2024, compared to 2023, was seen across the board. Most credit unions with less than $100 million in assets reported negative membership growth while credit unions with assets greater than $1 billion reported relatively strong membership growth of 3.8% due to organic growth and mergers.

“Credit unions should expect membership growth around 1.5% in 2024, and a slightly better 1.8% membership growth is forecasted for 2025 as loan growth picks up,” Rick said.

T CUs and members

Comments

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Sunday Reading - Landmine Rat Honored

  Landmine Rat Honored   Cambodia unveiled the world’s first statue honoring a landmine-detecting rat (w/photo) Friday. Magawa the rat lived to 8 years old and identified more than 100 landmines and other explosives from 2016 to 2021.  There are more than 100 African pouched rats deployed in landmine detection operations across the world. To identify mines, the rats are trained to sniff out explosive compounds like trinitrotoluene, or TNT. (The rats are not heavy enough to trigger detonation.) In Cambodia, up to 6 million landmines remain undiscovered, most planted during three decades of conflict, from the Vietnam War era through Cambodia's civil war . Since 1979, roughly 20,000 people have been killed in Cambodia, and roughly 40,000 wounded as a result of the mines. Magawa cleared more than ...
Post a Comment
Read Complete Article HERE>»

NCUA Board briefed on four topics

The NCUA Board heard briefings on four topics during its meeting Thursday, including the status of the deregulation initiative, a clarification regarding existing rules applicable to brokered and reciprocal deposit arrangements, and the agency’s 2026-2030 Strategic Plan and 2026 Annual Performance Plan.   Acting Director of the Office of Examination and Insurance Amanda Parkhill provided an overview of Phase 1 of the agency’s Deregulation Project, which focuses on targeted, technical changes to remove outdated or unnecessary requirements and improve clarity. The agency made it clear that the effort will likely continue into late 2026 or early 2027, evolving over time based on policy priorities and stakeholder input.   NCUA General Counsel Frank Kressman briefed the board on brokered and reciprocal deposit arrangements and the NCUA’s FAQs on this topic. The briefing demonstrated how a brokered deposit network operates with respect to low-income designated (LID) FICUs ...
Post a Comment
Read Complete Article HERE>»

How Your Bank/Credit Union Can Fight ‘Soft Switching’ — and Even Steal a Few Accounts of Your Own

Your Members Aren't Leaving in a Huff, They're Just Fading Away. Here's How to Stop It. “Soft switching” is picking up as Americans’ financial activity continues to fragment among multiple players, according to new research from JD Power. This trend has implications both for banks and credit unions that want to retain and grow existing relationships, as well as those that would also like to expand by snapping up accounts from other institutions. Key risk:  Once someone establishes a relationship with another provider, their one-time primary financial institution risks slipping into second place — or even losing the relationship entirely. Need to Know: The average checking account customer now has three deposit accounts at different institutions, the study found. One out of five consumers moved money away from their primary financial institution in the past three months, according to the study, an increase over the 17% rate seen in the previous edition. Departures aren’t sud...
Post a Comment
Read Complete Article HERE>»

The Case for Sharing a CEO Between Credit Unions

  Embracing Collaboration: The Case for Sharing a CEO Between Credit Unions In recent years, credit unions have faced numerous challenges, from regulatory pressures to evolving member expectations. As many seasoned leaders retire, smaller credit unions often find themselves at a turning point. In this landscape, one innovative solution is gaining traction: sharing a CEO between two credit unions. This approach not only addresses financial constraints but also fosters collaboration and enhances service delivery. The Rationale Behind Sharing a CEO 1. Financial Sustainability One of the most pressing concerns for small credit unions is maintaining financial health amid rising operational costs. A shared CEO model alleviates the financial burden of hiring and compensating a full-time executive. By splitting salary and benefits, both credit unions can allocate resources more effectively, allowing for investment in member services, technology, and community initiatives. ...
Post a Comment
Read Complete Article HERE>»

Reading Up On Recessions

  Reading Up On Recessions       Background Stemming from the Latin word “recessus” (meaning “a retreat”), recessions are  sustained periods  of declining activity in a country’s economy. During a recession, unemployment rises while economic output falls across a large swath of industries. Recessions are inevitable in modern economies, with one occurring about every six to seven years ( What causes recessions ?).   One common definition of a recession is when a country logs two consecutive quarters of shrinking gross domestic product, but in practice, ...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - The gold standard, explained

  Gold Standard       The gold standard, explained A gold standard is a system where a country’s currency is pegged to, and can be converted into, a fixed amount of gold. It’s typically meant to create a sense of security in the country’s currency: When a government uses a gold standard , its currency can be exchanged for an equivalent amount of gold—although regulations around redemption vary by country.   After the Civil War, in 1873, America adopted the gold standard for the first time. At the time, if gold was priced at $100 an ounce, each dollar  rep...
Post a Comment
Read Complete Article HERE>»

Open Banking Pushes Leading Credit Unions Ahead In Race For Member Loyalty

  https://youtu.be/pUIV8hwSDCE NEW YORK—Credit unions that embrace open banking aren’t just keeping pace with competitors—they’re pulling ahead, new data show. A new report finds that innovation in digital tools and personalized experiences is emerging as the decisive factor separating credit unions that win lasting member loyalty from those at risk of losing ground. “ The 2025 Credit Union Innovation Readiness Index: Closing Gaps, Winning Members ,” a June report produced in collaboration between  Velera  and PYMNTS Intelligence, underscores innovation as a defining factor for credit union success. iStock-Korakrich Suntornnites “Facing shifting expectations from both consumers and small to medium-sized businesses (SMBs) toward digital convenience and tailored experiences, credit unions must modernize not just to compete with traditional banks, but to remain relevant to their members. The report, based surveys of 500 credit union executives, 15,000 U.S. consumers, and nea...
Post a Comment
Read Complete Article HERE>»

Long-Stalled Credit Card Competition Act Moves Forward In Senate Clarity Act Markup

WASHINGTON—A long-stalled bipartisan push to boost competition in the credit card market moved closer to becoming law late Friday, as Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL) advanced a new amendment attached to the Senate Agriculture Committee’s markup of the Digital Asset Market Structure and Investor Protection Act, commonly known as the Clarity Act. Dick Durbin The amendment, a core component of the long-debated Credit Card Competition Act, would prohibit major credit-card networks and large issuing banks from enforcing network exclusivity on credit cards. Supporters argue the measure would expand transaction-routing competition, weaken the dominance of the largest payment networks, and reduce swipe fees that merchants say inflate consumer prices. The renewed momentum reflects President Trump’s recent backing of efforts to rein in credit card costs, a shift that has altered the political trajectory of legislation that has struggled to advance in prior Congresses. With Tru...
Post a Comment
Read Complete Article HERE>»

USPS Defends Banking Pilot, While Opponents Call It Illegal

  By David Baumann - July 11, 2022 Program has faced opposition from the outset, including from credit union groups, and has struggled to gain real traction. The U.S. Postal Service (USPS) argued this week that the controversial pilot program it is operating i...
Post a Comment
Read Complete Article HERE>»