Member Relationships Extending Beyond the Balance Sheet

Most information reported about member activity centers around facts from the 5300 call report. This data misses a lot of other important activity. Recently two studies have shown how much is occurring off the balance sheet.

 
 

Most information reported about member activity centers around facts from the 5300 call report. This data misses a lot of other important activity. Recently two studies have shown how much is occurring off the balance sheet.

The first study was for “assets under management” –primarily mutual funds. There were 1,128 credit unions with programs at year-end up from 943 the previous year. The assets managed are estimated at $25.9 billion. This was before the most recent market meltdown. All but 12 of the 100 largest credit unions have a program. The top three providers to this group are Members’ Financial (CUNA Mutual) with 29 clients, CUSO Financial Services with 17 and FNIC with 14.

Another off balance sheet area is first mortgage loan servicing. Again, using a survey of over 200 credit unions, Callahan & Associates’ estimates that the total servicing portfolios for 1st mortgages not in portfolio is $17.8 billion. Navy Federal Credit Union holds $9 billion of this amount. Many credit unions continue to sell 1st mortgages with servicing released. However, if the estimate of $17.8 billion is added to the 1st mortgages held on the books, then credit union activity in this area is at least 23% higher than reported solely by counting the 5300 data.

Why is this data important? Increasingly credit union member relationships and revenue opportunities are not confined to balance sheet products and services. These “off balance sheet” activities are not recorded. “What gets measured, gets managed” is an old truism. We hope that by collecting and publishing data on these activities, all credit unions can develop more effective strategies.

Complete research reports on the 1st mortgage survey and the broker dealer/mutual fund business are in the latest Callahan & Associates, Inc. publications: the
Financial Yearbooks.

 

 

 

April 23, 2001


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