After a sluggish 2006, many credit unions have told us that reigniting share growth is a priority for 2007. Achieving that goal could necessitate developing a new set of skills, as our research suggests that credit unions often “specialize” in one of the two prongs of share growth.
Assessing Share Growth Skills in Two Ways
Obviously shares grow in one of two ways: through encouraging current members to deposit more with the credit union, and through bringing new depositing members into the credit union. One type of growth may be naturally easier than the other for a credit union, regardless of size. Growth in share balances can be affected by local and industry macroeconomic trends beyond a credit union’s control, such as employment and income dynamics. And member growth may be driven by the characteristics of the credit union’s field of membership as well as its size and reach. For example, Navy Federal Credit Union ($26.3B in Merrifield , Virginia) has posted consistently strong member growth results thanks to a steady stream of service recruits. For Navy, member growth is more consistent over time than share balance growth while the reverse tends to be true for other credit unions.
In the darker moments of 2006’s share stall, some industry watchers questioned whether smaller credit unions have the scale to compete for deposits. Our research suggests that size is not a dominating factor in share growth success for credit unions with at least $100M in assets. The graph that accompanies this article makes this point. In it, we’ve plotted the three-year annualized growth of share balance against the three-year growth of members for the 1,217 credit unions with assets greater than $100M as of September 30, 2006. The size of the point represents total shares relative to all the credit union plotted.

Click to enlarge graph
Debunking the Size Story
You can clearly see that it’s true that size tends to be a benefit in terms of new member acquisition. This makes sense in that larger credit unions may have greater resources and reach to attract members, through advertising, branch convenience, etc.
Yet the nimbleness and member intimacy that a smaller credit union may offer can be a plus in growing shares. As the graph makes clear, smaller credit unions outperform very large credit unions on both member development/retention—that is, increasing the average share balance—and the acquisition of new members. The very best share growth results for the past three years have been generated by credit unions with well under $1B in assets.
Ambidexterity Linked to Higher Growth
Share growth leaders are more likely to be successful at both axes of share growth than to be above-median at one and below-median at the other. Credit unions that can do both well (and simultaneously) are better positioned to weather the ups and downs triggered by factors outside their control, such as economic trends and changing competition.
One of our New Year’s resolutions at Callahan and Associates is to develop creative new ways to present credit union financial performance—ways that will help decision-makers and industry watchers quickly assess the interplay of different performance measures and the potential levers of enhanced results. Your feedback makes us better. Please let us know, via the comment box below or by sending an email to Callahan@creditunions.com, how you like to use data to support your decisions and management.