Stronger Ties Lead To Larger Wallet Share

From credit cards to share accounts, business is booming at credit unions.

 
 

As consumers look for more from their financial relationships, credit unions continue to benefit from the exodus of disgruntled account holders at large institutions. The total number of credit union members rose to 95.1 million as of December 2012. To keep the momentum going, credit unions are poised to increase wallet share by deepening their ties with members and becoming their primary financial institution.

The 2.8 million checking accounts opened at credit unions in 2012 outpaced the 2 million new members that credit unions added over the same year. The number of checking or share draft accounts grew 6% while membership grew 2.2%.

That increase in share draft accounts is a sign that members are choosing to use their credit union as their primary financial institution. A checking account is the principal account for most families, and it is a good indicator of where the member will go for additional financial services. As a result, credit unions not only are increasing their membership base at a record rate but also are handling more financial services for their members.

MEMBERSHIP & SHARE DRAFT GROWTH
DATA AS OF DECEMBER 31, 2012
© Callahan & Associates | www.creditunions.com

membership-and-share-draft-growth

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

Perhaps the most accurate gauge of wallet share is penetration rate, the percentage of members who use a particular service at a credit union. The trend of strengthening ties with members exists here as well. For instance, share draft penetration reached 51.4% in December, an increase of 1.88 percentage points from a year ago, but core deposits, which accounted for 67.2% of all shares at credit unions nationwide, grew 10.3% during the same period.

The increase in core deposits shows that members are willing to conduct more of their financial business at credit unions. Although the number of share accounts has held steady around 1.9 per member, the top quartile of credit unions with assets above $20 million managed 2.2 deposit accounts per member. In addition, auto loan penetration, which had been decreasing the past few years as consumers slowed down their purchases of vehicles, is back on the rise at credit unions nationwide. Auto loan balances increased 8.2% in 2012 while auto loan penetration rose 15 basis points to 16.1%.

As consumer confidence returns, credit card use is rising. Credit card penetration, or the number of members with a credit card at their credit union, increased to 15.3% of all members. The utilization rate, which measures the amount of credit used, stands at 33.5% at credit unions nationwide. Currently, 54.8% of credit unions offer credit cards to their members.

PRODUCT PENETRATION METRICS
DATA AS OF DECEMBER 31, 2012
© Callahan & Associates | www.creditunions.com

product-penetration-metrics

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

As new members open accounts and existing members bring deposits over from other financial institutions, credit unions are enjoying a higher average member relationship, which is the total dollar value of outstanding loan balances (excluding business loans) and share deposits per member. For 2012, average member relationship rose to $15,336 from $14,869 in 2011, an increase of 3.1%. That growth rate is no outlier either. From 2007 to December 2012 the compound average growth rate for average member relationship was 2.6%. The top quartile of credit unions with more than $20 million in assets saw an average increase of 11.5% in member relationship year-over-year.

Shares have increased more than loans over that time span. The average share balance or total shares per member increased 3.8% to $9,357 for December. The average loan balance, which is the outstanding balance per loan account, was $12,580 for 2012, up 64 basis points. Meanwhile, the value of outstanding loans per member rose 2.1% to $5,979.

AVERAGE RELATIONSHIP
DATA AS OF DECEMBER 31, 2012
© Callahan & Associates | www.creditunions.com

average-relationship

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

 

 

 

May 13, 2013


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