Location & Size Matter for Credit Unions: CU Times Analysis
A CU Times analysis shows small- and medium-sized CUs in the Middle Atlantic states have fared worse than others in the past year.
A CU Times analysis shows small and medium-sized credit unions in the Mid-Atlantic states have fared worse than others in the past year, while bigger credit unions in the same area have performed among the best.
The 1,092 small and midsize credit unions in Region 2 generated $14.7 billion in new loans in the 12 months ending Sept. 30, up 3.7% from the volume for the preceding 12 months. That compares with average growth of 6.9% for all like-sized credit unions and 6.5% for larger ones.
Those Region 2 originations represented 38.3% of average loan balances, down 1.4 percentage points from a year earlier. Total originations for other small and mid-sized credit unions represented 45% of average loans, down 0.7%. For big credit unions, originations were 53.3% of loans, down 2.7%.
NCUA issues a state and regions report each quarter, but its analysis is limited because it uses only year-to-date values presented as annualized figures. The most recent report, for example, omits any actual fourth-quarter results, so seasonal patterns that might be reflected in the period are missing.
The short-term picture is also clouded. The reports do not separate income statement or origination data to show the most recent, 3-month volume compared with the like period a year earlier. That type of data is typically presented along with longer-term data in quarterly reports for both profit and non-profit organizations.
Also, any geographic reporting from NCUA data is based on the happenstance of headquarters location. While small and mid-sized credit unions will tend to have almost all transactions within their home state, large credit unions like Navy Federal Credit Union and PenFed have members across the globe.
This analysis by CU Times is an attempt to use NCUA data in a way that can show results by both size and geography.
Some patterns that emerge have been frequently reported. Broken down just by size, asset growth (+3.4%) among small and mid-size credit unions was half of that of larger credit unions, and membership growth (1.9%) was a third of the larger ones.
Looked at by region and size, Region 2 stands out as the locale for both the best and worst of times for credit unions.
Region 2 covers Delaware, Maryland, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia and the District of Columbia. It is home to 1,154 credit unions. Its 63 credit unions with $500 million or more in assets have $220.3 billion in assets and 17.1 million members.
About half of those assets and members come from the fact that Region 2 is home to the nation’s largest credit union, Navy Federal Credit Union of Vienna, Va. ($95.3 billion in assets, 8.1 million members) and the third-largest, PenFed of Tysons, Va. ($24.1 billion in assets, 1.7 million members).
The big credit unions of Region 2 had a 1.20% return on average assets for the latest 12 months, up 5 basis points from the preceding 12 months. That compares with ROA for big credit unions ranging from a low of 0.94% in Region 1 (the Northeast plus Michigan and Wisconsin) to 1.02% for the western states of Region 5.
The lowest ROA could also be found Region 2: Small and mid-size credit unions had ROA of 0.50%, just a hair worse than the 0.52% of Region 1.
Region 2 is also headquarters for the best origination growth. Total originations represented 64.2% of average loans for big Region 2 credit unions, well above even its peers. Big credit union originations-to-loans ranged from 47.7% for Region 3 covering the Southeast to 54.1% for Region 5.