Share Growth Accelerates in 2007

Preliminary fourth quarter data shows strong credit union share growth. This share growth has also had an impact on the composition of the share portfolio.

 
 

Members directed their deposits to credit unions at a faster pace in 2007 than in 2006. As additional fourth quarter data becomes available, it becomes clear that share growth is one area where credit unions were successful in 2007. Preliminary data from Callahan & Associates' First Look program shows annual share growth among reporting credit unions of 8.6% as of December. This preliminary data represents credit unions that account for $247.9B in total assets, or approximately one third of total industry assets.

This increase in total shares cannot specifically be tied to one single share category, but rather increased growth figures across the board. In December, annual growth rates in all but one share category had increased from the growth rates in the previous December, although some of those growth numbers still remain negative. The only category to see slowdown in its growth rate was share certificates, which still at still posted the fastest growth rate at 17.4%. Certificates account for the largest component of the share portfolio among First Look credit unions at 36%.

Share Growth by Component

Data as of December 31, 2007 for all
First Look Credit Unions

Share Drafts

-3.1%

Regular Shares

-4.2%

Money Market

14.5%

Share Certificates

17.4%

IRA and KEOGH

12.8%

Other Shares

8.3%

TOTAL SHARES

8.6%

Portfolio Composition Adjusts Based on Member Needs

Perhaps more interesting than the growth trends in the credit unions share portfolio is the changing makeup of that portfolio. For the credit unions currently reporting fourth quarter data, three categories have declined as a percentage of portfolio and three have increased.

Money market share balances grew 14.5% making it the second largest component of share portfolio at 21.4%. The growth in money market balances is partly due to declining regular shares balances, which had a negative growth rate of 4.2% for the year.

Share balance changes in 2007 show the continuing trend of credit union members putting more into higher yield savings options and shifting away from the more traditional core deposits. This trend will likely continue as members shift towards long-term deposits in anticipation of the Federal Reserve Board cutting the target rate. Ten years ago, in December of 1997, regular shares were by far the largest percentage of the share portfolio for the credit unions reporting First Look data at 33.9%. Today regular shares make up only 21.3% of the portfolio, the third largest component.

As the needs of members continue to change, so too does the make up of the credit union share portfolio. In order to maintain these positive trends in share growth, credit unions need to be prepared to adapt based on changes in member needs. Innovation and adaptation are the best ways for credit unions to stay ahead of the curve and anticipate the type of products and services members are looking for. While many credit unions offer a higher rate in order to drive deposit growth, there are other options available for credit unions looking to grow their share portfolio.

 

 

 

Feb. 11, 2008


Comments

 
 
 
  • Credit union share growth is rising. We really are in a recession!!!!
    Anonymous