share growth at midyear received a lot of press, and rightly so.
This was the first double-digit annual share growth (12.2 %) in
a very long time. The liquidity came just in time to offset an increasing
loan-to-share ratio at yearend.
is a footnote to an even bigger trend. For the last six years the
fastest growing part of credit unions has been non-interest revenue,
or income generated primarily by checking account fees and interchange
income from debit and credit cards.
income grew by 24% compared to the first six months of 2000. For
the past six years the rate of growth has exceeded both loan and
investment income. Note these latter two sources also have an interest
rate effect in that revenue can go up even if balances stay flat
when market rates rise. Non-interest income totaled $2.3 billion
for the first half of 2001. The growth rate has averaged almost
15% per year since 1995.
An even better
indicator of the importance to revenue growth is that the net-interest
margin in dollars has grown at a very predictable 4% per year while
the non-interest income is over 15%. At June 30, 2001, non-interest
income equaled 103% of net income. One year ago the ratio was 86.5%!
We will be writing
about some amazing non-interest income results in the weeks ahead
on www.creditunions.com, including one credit union that reported
non-interest income equal to 4% of average assets! We’ll have
to look at that number a little more closely.
is that the most successful business you have may be something as
simple as a transaction provider. How do you grow this opportunity
further? It is a situation that most certainly fits the competitive
advantage of most credit unions as local, community-oriented institutions.