Understanding Credit Unions in the Financial Services Market

Looking beyond the basic data, credit unions have a larger impact in the market that needs to be better understood.


America’s 8,638 credit unions serve 87.4 million members as of September 30, 2006.  Membership growth has slowed to 0.90% for the past 12 months despite continued expansion of credit union fields of membership.  Higher average share and loan balances indicate that existing members are deepening their credit union relationships.  As a result, assets are at an all-time high of $716.9 billion.

Market Share Varies
Credit unions’ market share remains small in many businesses in which they compete.  The industry’s assets represent just less than 6% of the combined $12.5 trillion of assets in banks, thrifts, and credit unions.  Credit union shares account for approximately 9% of retail deposits in the U.S.

Auto lending is the market in which credit unions have the largest share at 15.4% as of June 2006. A credit union is the leading auto lender in three states.  America First holds the top spot in Utah, BECU in Washington, and OnPoint Community in Oregon.  However, credit union success varies by state.  For example, credit unions capture 43.2% of the market in Utah, but only 0.5% percent in Alabama, based on data provided by AutoCount. 

Credit unions have captured 2.3% of mortgage origination volume in 2006.  This is up from the past two years but below the 2.5% share captured in 2002.

Credit card market share is similar to that of mortgages at 3.0%.  Credit unions are growing their share of this market however, despite competing against much larger players.

Impact Beyond the Numbers
These market share numbers tell only one part of the credit union story.  Credit unions exist for one primary purpose: to improve the well-being of their members.  The impact credit unions make in their communities goes much farther than these results and can be seen in other areas, including:

  • The better economic value realized by credit union members
  • Their ability to provide members the best deal even if they are not financially astute
  • Credit unions’ intent to always act in the member’s interest, not the institution’s

Better economic value is the most tangible of these and can be measured most easily by loan rates.  For many lending products, credit unions continue to provide lower rates, no or low fees, and a broader range of credit at reasonable rates than alternative lenders offer. Providing access to affordable credit is the primary engine that drives the credit union model.

Understanding the Credit Union Difference
For-profit financial institutions must earn a profit from consumers to pay shareholders.  Credit unions act in the member’s interest.  The more the public understands this dynamic, the better the opportunity to increase their market impact.

New to the credit union world? Or do you need a refresher on the fundamentals of the cooperative model?  Check out Credit Unions 101, a introductory training webinar on the core basics of the industry, brought to you by Callahan and Associates.




Dec. 4, 2006


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