Does Size Make a Difference- A Look at the 100 Largest CUs

There were 10,538 active credit unions at yearend. The largest 100 receive, because of their size, much more attention than any other 1% of credit unions.


There were 10,538 active credit unions at yearend. The largest 100 receive, because of their size, much more attention than any other 1% of credit unions.

These 100 now total over $130 billion or 29.3% of all credit union assets. By comparison, the largest 100 banks and the largest 100 thrifts each hold just over 72% of their industry's assets. The credit union system is much less concentrated in larger organizations.

Within the credit union top group, 43 each manage over $1 billion in assets. The total membership however is smaller than the asset share. 21% of all members are with these leaders, an indication that the average relationship is greater than in the rest of the credit union system.

Do these size leaders have any significant differences from their smaller brethren? Are these credit unions doing something unusual that helps them grow? Is there an advantage in size?

A Look at Performance Trends

A comparison of the growth rates of the top 100 with the numbers for all credit unions suggest some minor, but consistent variances. The chart below compares the operating results for 2000 of these two groups.

Top 100
All US
Share growth
Loan growth
Member growth
OpExp/Avg Assets

With the exception of the expense ratio, almost all differences in financial performance are minor. The lower operating expense ratio does suggest that there are some economies of scale. Part of this benefit is passed back to members who receive a higher proportion of total revenue in dividends at 48.35%, as compared to members at all credit unions-43.00%. This fact may explain the slightly faster share and member growth rates.

However before concluding that economies of scale work for everyone, it should be noted that several of the top 100 had very slow share growth rates-less than 1%. Also the range of earnings as measured by the ROA shows a wide variation from a low of 44 basis points to a high of 2.28%. Size does not automatically guarantee a certain result.

One conclusion is that while larger credit unions may have a lower cost structure-on average-the financial model that defines all credit unions also still applies to the top 100.

Ways in Which Size Can Matter

Largeness per se does not automatically create a different performance model but size can have other impacts. Larger does mean more visibility in many geographically defined markets. The press frequently prefers to write about credit unions that more readers have heard of.

Size can also mean the ability to apply more resources quickly to an issue. When political clout or market scale is needed, larger credit unions can get to the starting line with more dollars faster.

With greater resources to deploy larger credit unions tend to begin initiatives faster as well as be the primary focus for vendor innovations. It is more efficient to sell one large credit union a program than to gain 10 smaller credit union sales with the same total outcome. For example 88% of the top 100 have a third party mutual fund program, versus just 11% of all credit unions. All but one of the largest 100 has a web site, but only 3,300 out of the 10,538 report a web site address in the December call reports.

De Facto Leadership

Because larger credit unions tend to be more visible in their changes, they can provide de facto business and movement leadership even if that is not the intention of their actions. When a large credit union installs ATM machines in an alliance with McDonalds the event is industry news. When a small credit union has an earlier but more limited program, the story does not carry the same weight.

In many areas of the country the largest credit union in a city or a state may have more staff expertise than the trade organization or smaller credit unions in the same geographic area. This reality means that the involvement, or lack thereof, from large credit unions in initiatives such as shared branching, ATM networks or even CUSO's for real estate or data processing services can mean the success or failure of cooperative efforts.

Whether sought or avoided, many large credit unions define the agenda and the priorities for the credit unions in their operational area. This implicit role is real even if the credit union chooses to go it alone from the rest of the system. Indirect lending programs are an example of an initiative that a large credit union can undertake on its own or in concert with other area credit unions. However if a car dealer lending program is not a joint one, then the smaller credit unions will often be forced to create an alternative just to protect their own share of the market. By not cooperating a large credit union can energize its own competition.

Where Size Does Not Make a Difference

So the top 100 are special in that they receive a disproportionate amount of attention and expectations for leadership. In the total scheme however, even a large credit union is not big. The $130 billion in total assets of the largest 100 would only place this group as 7th in a listing of the largest banks. In fact, the largest bank, Bank of America with $584 billion, has more assets than the entire credit union market by over $140 billion! No matter the size advantage a credit union has versus its brethren in a local market, there will often be a major bank or thrift than can make better bids for ATM placement, auto dealer loans or first mortgage referrals. In the context of markets, local or national, there are no large credit unions.

A second observation is that there is virtually nothing a large credit union does, that a much smaller credit union cannot also do. From both legal and practical standpoints, the range of activities for the system is virtually identical. Whether the issue is technology investments or marketing innovations, size does not prohibit participation.

Today competition is often about change, learning a new process or business faster than a competitor. In some areas, significant change can often start in smaller settings and once found to be feasible, can be extended to a wider group. Field of membership definitions, changes in share insurance or regulator can more easily be implemented in less visible organizations. A large size may mean that turning the ship requires more time and encounters more resistance.

So while size confers some resource advantages, it does not automatically mean competitive advantage. Large and small can be leaders in information based, advice centered member value strategies. Digital assets, that is member information, are available to all credit unions more or less equally. The only limit to their use is each credit union's mindset, not assets.




May 29, 2001



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