Slow share growth is a challenge for many credit unions today. Nationally, credit unions are averaging 3.8% annual share growth through June. However, nearly one-fourth of all credit unions have exceeded the average, and in some states the national average does not reflect local trends. For credit unions located in the 10 fastest growing states that are measuring their performance based on local averages, the performance benchmark is set significantly higher.
Seven states have posted annual share growth rates that more than double the national average, and three states have at least tripled the average. Credit unions in Mississippi, the fastest growing state based on share growth, have grown at more than four times the national average during the past year.
The impact of hurricane relief funds is certainly a factor in the high share growth rates recorded by Mississippi and Louisiana, the third fastest growing state. However, the 10 fastest growing states for the past year are located across the country and influenced by a range of economic conditions. Western states occupy five of the top 10 spots. Kansas is in fourth place. Two Southern states, Tennessee and Virginia, round out the top 10.
No Simple Growth Formula
It is difficult to determine one overriding factor for the growth rates posted by these states. High dividend rates do not appear to be a driver as only one state, Virginia, exceeds the national average for cost of funds. Size also does not appear to be a key ingredient, with the average asset size of credit unions in six of the top 10 falling below $60 million, well below the $81 million industry average as of June.
External growth via new members seems to be the most common factor among these leaders. Six of the top 10 states in share growth also rank among the top 10 in member growth over the past year, including the four fastest growing states in members: Arizona, Kansas, Virginia and Utah. Two other states, Idaho and Oregon, rank in the top 15 nationally in member growth.
With national membership growth averaging just over one percent, the lack of external growth has made it more difficult to post higher share growth numbers. Credit unions in the top 10 states appear to be effectively conveying the value of membership, thus attracting new members and bringing in new sources of deposit and loan growth. Their results indicate that there is still momentum in the credit union system.
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