Preliminary Data Shows Non-Interest Income on the Rise

First Look data shows a significant increase in non-interest income growth over last year.

 
 

Preliminary results for Callahan & Associates’ First Look program for second quarter data show relative quarterly growth across a number of key measures. With 22% of industry assets accounted for by respondents, credit unions experienced accelerated growth in membership and assets versus last year. In contrast, loan and share growth appear to have experienced a relatively slower rate of quarterly growth than in 2004. Non-interest income, however, experienced tremendous accelerated growth, increasing from 2.4% in 2004 to 14.3% in the second quarter of 2005.

Growth Rates:

Jun-05

Jun-04

     

Non-Interest Income

14.3%

2.4%

Loans

13.8%

14.8%

Assets

9.6%

9.0%

Shares

7.2%

8.2%

Members

5.1%

4.8%

Non-interest income is increasingly important to credit unions of all sizes to compensate for narrowing interest margins and shrinking bottom lines. According to the 2004 Callahan Non-Interest Income survey, over 50 percent of non-interest income derives from fees relating to share draft accounts. Overdraft protection—i.e. non-sufficient funds (NSF) and courtesy pay fees—constitute the lion’s share of the share draft-related fees.

A majority of the credit unions that experienced significant non-interest income growth in the second quarter have active overdraft protection programs. Lockheed Georgia Employees Credit Union’s ($558 million, Marietta, GA) Worry Free overdraft courtesy pay program, for example, charges $25 for each transaction that brings the member’s account balance below zero. The Department of Commerce Credit Union ($132 million, Washington, D.C.) also earns non-interest income through its Check Guard overdraft protection program that it implemented in the past year.

Individual credit union philosophies may differ on charging members overdraft protection fees. With interest margins compressed, however, it is important that credit unions develop alternative revenue streams to improve their financials.

Here is a list of the top 20 First Look credit unions over $50 million in non-interest income growth:

Credit Union

Assets

Jun-04

Jun-05

Non-Interest Income Growth

         

Department of Commerce

$132,656,447

$302,905

$727,347

140.1%

Members First

$58,629,891

$338,133

$687,865

103.4%

Cal State 9

$268,449,350

$1,418,337

$2,770,827

95.4%

San Jacinto Area

$66,510,825

$228,613

$409,370

79.1%

APCO Employees

$1,281,529,929

$699,468

$1,179,113

68.6%

Workers

$500,341,183

$2,117,344

$3,215,063

51.8%

Memphis Area Teachers

$524,716,606

$2,318,428

$3,426,127

47.8%

BrightStar

$265,388,567

$2,087,944

$3,063,468

46.7%

Novartis

$81,108,717

$167,158

$244,695

46.4%

Lockheed Georgia Employees'

$558,002,271

$2,845,771

$4,153,056

45.9%

Kinecta

$2,936,921,053

$10,147,295

$14,630,835

44.2%

Missoula

$210,071,661

$1,324,811

$1,837,121

38.7%

Abbot Laboratories

$353,416,708

$1,158,270

$1,589,456

37.2%

Brazos Valley Schools

$303,423,189

$1,759,666

$2,413,845

37.2%

Numerica

$553,194,209

$2,195,441

$3,005,183

36.9%

Texoma Community

$63,943,872

$357,811

$489,386

36.8%

Hudson Valley

$1,957,355,715

$6,102,592

$8,293,485

35.9%

San Francisco Fire

$376,195,194

$852,098

$1,155,111

35.6%

GTE

$2,050,169,791

$13,390,508

$18,076,500

35.0%

Campus

$301,664,788

$2,486,711

$3,355,877

35.0%

As of July 29, 2005, 220 credit unions have submitted their second quarter call report data to First Look. Join the First Look program now and get a jump start in your second quarter analyses. Callahan produces daily statistics for overall performance and tracks the key ratios for a quick reference guide to industry-wide trends. If you would like to submit your 5300 Call Report, click here.

Callahan & Associates is also conducting its semi-annual Non-Interest Income Survey that explores in more detail the accounts that comprise non-interest income. Participants receive a free research report and access to an educational webinar featuring three CFOs discussing how they have structured their fee income programs. Please click here to complete the survey.

 

 

 

Aug. 1, 2005


Comments

 
 
 
  • These new Creditunions.com writers continue to amaze me with their key analysis of the credit union balance sheet. Bravo, Molly, Bravo!
    Anonymous