Member Growth: A Light at the End of the Tunnel

As member growth continues to challenge the industry, a look at the experience of community chartered credit unions reveals that it takes time to generate market momentum.


Credit unions posted member growth in 2006 of 1.1%. This growth rate is down from 2005 and highlights the top challenge for many credit unions today. Credit union’s opportunity, however, is greater than ever. Almost every American can join a credit union today and over 100 new community charters each year are providing new venues for member growth within the industry.

There are 1200 federally chartered community credit unions across the nation today. These credit unions have already decided to serve a broader community with the belief that increased reach will result in higher growth. Looking at the data on community charters reveals that time is a significant factor in producing above average growth.

A Five-Year Perspective
In 2000, 114 federal credit unions were granted community charters. At that time, these credit unions’ 1.3% 5-year compounded growth rate trailed the industry average for the same period by 71 basis points. In contrast, 6 years later at year-end 2006, this same group of credit unions has beaten the industry average for 5-year member growth by 91 basis points. In addition, the group’s 12-month member growth rate of 3.3% is more than 300 basis points ahead of the national average.


114 CUs Community Chartered in 2000

Average US CU

5-Year Avg Annual Member Growth (’95-’00)



5-Year Avg Annual Member Growth (‘01-‘06)



12-Month Member Growth (‘05-‘06)



Average Assets 2000



Average Assets 2006



Whereas the community charters are now seeing above average growth rates, it has taken time to produce these results. As shown in the chart below, after receiving community charters, the group experienced an initial jump in membership growth followed by a slow down. It took about four years to counter national trends and create upward momentum in annual growth.

Comparing the set of credit unions from 2000 with those who received community charters in 2005, similar results are panning out. This group of 132 credit unions was lagging behind the industry in 5-year member growth with 1.1% and 2.7%, respectively. Since getting their charters, they received an initial boost in annual growth as they are currently at 1.9% versus the industry’s 1.1%. If trends prevail, it will take about four years for these new charters to begin to see consistent, sustainable growth.

A community charter is not the only way to see such growth. There are many credit unions that have found new ways to increase growth whether it is organically, through mergers, using indirect lending, or just through a focus on their current SEG base.

If you would like to see how your credit union is performing, click here for a Member Growth Analysis Packet, brought to you by Callahan & Associates’ Peer-to-Peer financial analysis software.