Stronger Relationships With Members Pay Off In 2012

As credit unions broaden their membership base, many are also expanding the business they do with existing members.

 
 

More than two million new members joined credit unions in 2012, a record number for the industry.  According to the 6,508 credit unions currently reporting data in Callahan and Associates’ FirstLook program, annual membership grew 3.1% in the fourth quarter of 2012, up from 2.7% in the previous quarter.

 

 

NET NEW MEMBERS AND MEMBERSHIP GROWTH
Data As Of December 31, 2012, From FirstLook Credit Unions

net-new-members

Generated by Callahan & Associates' Peer-to-Peer Software.

Attracting new customers is a necessity for any financial institution, but getting those people to use more of its products and services is even more important. For credit unions, the economic participation of members is one of the seven cooperative principles: “Members contribute equally to, and democratically control, the capital of the cooperative.” As this principle goes on to state, members benefit not from how much capital they invest but in proportion to the amount of business they conduct with the cooperative.

A customer’s primary financial institution is often the same place where he has a checking account. At credit unions, where checking accounts are known as share draft accounts, the penetration rate as of December 31 was 51.3%, up 1.7 percentage points from the share draft penetration rate of 49.6% in December 2011. Even more encouraging is the growth in the number of those accounts compared with the increase in membership.

The 6.7% increase in the number of share drafts is more than double the membership growth of 3.1%, indicating that existing members are opening these accounts and bringing deposits over from other financial institutions. Given that rates are fairly consistent across all financial institutions, this influx of deposits from existing members shows that consumers are increasingly looking for a quality relationship with their financial institution and may not be as rate-driven as they used to be.

The number of accounts per member was nearly unchanged from last year, with 2.37 share and loan accounts per member as of December 31. Oregon’s credit unions led the nation in this metric with 2.65 loan accounts per member.

MEMBER RELATIONSHIP METRICS
Data As Of December 31, 2012, From FirstLook Credit Unions

  CUs < $100M CUs $100M-$250M CUs $250M-$500M CUs $500M-$1B CUs > $1B
Overall Relationship
Members/Potential Members 5.42% 4.41% 4.20% 4.59% 8.80%
No. of Loan & Share Accts Per Member 2.04 2.26 2.36 2.41 2.54
Average Member Relationship $9,778 $12,874 $14,395 $15,791 $18,681
Shares
No. of Share Accts Per Member 1.61 1.80 1.87 1.90 1.98
Value of Shares Per Member $6,235 $7,979 $8,835 $9,649 $11,188
Share Draft Penetration 35.73% 48.00% 52.93% 55.23% 57.14%
Annualized Dividends Per Member $30 $44 $50 $55 $84
Loans
No. of Loan Accts Per Member 0.42 0.46 0.49 0.51 0.56
Value of Loans Per Member $3,624 $5,178 $5,899 $6,691 $7,976
Auto Loan Penetration 14.07% 15.66% 16.24% 17.23% 16.75%
Credit Card Penetration 9.41% 11.80% 13.95% 14.49% 19.72%
Mortgage Loan Penetration 2.70% 4.24% 4.57% 4.65% 5.04%
Earnings & Productivity
Annualized Total Income Per Member $342 $465 $514 $554 $647
Annualized Fee Income Per Member $56 $83 $90 $90 $78
Annualized Operating Expenses Per Member $258 $328 $345 $355 $344
Members/FT Equivalent Employees 404 347 349 353 417


Generated by Callahan & Associates' Peer-to-Peer Software.

All of these positive factors have led to an increase in the overall value of the average member relationship, which is the total dollar amount of deposits and loan balances (excluding business loans) per member. Since the end of 2011, that number grew 2.7%, from $14,981 to $15,392, reaching an all-time high for the average member relationship.

GROWTH IN AVERAGE MEMBER RELATIONSHIP BY PEER GROUP
Data As Of December 31, 2012, From FirstLook Credit Unions

growth-in-avg

Generated by Callahan & Associates' Peer-to-Peer Software.

 

 

 

Feb. 25, 2013


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