End-of-year performance data highlights strengths and opportunities for credit unions in 2014. More than 2,500 credit unions representing 50% of the industry’s assets are reporting fourth quarter data in Callahan & Associates’ FirstLook program. For these credit unions, share growth is slowing as members save less and spend more amid the improving economy. Deposit balances have risen 4.3% annually; that’s down from the 6.6% rate recorded by FirstLook credit unions in 2012. Within the share portfolio, share draft balances are growing at a solid pace. In 2013, share draft balances increased 7.6% while share certificate balances dropped 3.1%, a sign that members are hesitant to lock up their funds for the long term in this low-rate environment.
SHARE Balance GROWTH BY COMPONENT
Data as of December 31, 2013, for FirstLook credit unions
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Source: Callahan & Associates’ Peer-to-Peer Analytics
According to end-of-year data, credit unions are well-reserved. The net worth ratio for FirstLook credit unions is nearly 10.8%, which is significantly higher than the 7.0% requirement to be well-capitalized. NCUA’s proposed new measure of capital, the risk-based capital ratio, is on the minds of credit unions as the industry enters 2014. As of December, the industry’s capital ratio average is 15.5%, comfortably above the 10.5% minimum requirement to be well-capitalized.
Strong performance in 2013 has set up credit unions for another solid year in 2014. Although the industry will face challenges, the economy continues to rebound and the cooperative financial institution model remains strong.