Using the Power of Data to Identify Trends and Opportunities in the Share Portfolio

This article walks you through the steps of drilling down through national industry trends in order to identify information that you can apply to your credit union.


Each quarter, following the NCUA's public release of the 5300 call report data, Callahan & Associates distills it to indentify industry trends and analyze nationwide credit union performance. This data can be evaluated in a vast number of ways, but you always have the ability to drill down further and use the data to draw specific conclusions relevant to your credit union. Let’s create an example by starting from a general trend and working down to a point where the data can be used for individual credit union planning purposes.

You can start off with a general industry trend – for instance, credit unions recently grew share balances at a striking rate:

Historically, the first quarter of the year is the strongest for share growth, as members deposit their year-end bonuses and tax refunds. In addition to these seasonal factors, the average U.S. savings rate skyrocketed from nearly 0% in early 2008, to 4.2% in the spring of 2008. The falling stock market, bank failures, and continuing economic instability have resulted in a consumer flight to safety and quality. Reflecting this, credit union industry share balances rose $43.6 billion in the first quarter of 2009, a record growth rate for the first quarter. Balances are up $56.4 billion, or 8.3% for the past twelve months. Next, it might be logical to ask: "How did each different type of account fare in this high-growth environment?"

While both regular shares and share drafts reversed negative growth trends from 2007, the products that experienced the highest rate of growth were money market and IRA accounts. The share growth increase was led by a $19.1 billion rise in money market balances as members searched for competitive rates and liquidity. Although they comprise a smaller portion of the total portfolio, IRA accounts experienced very strong growth as stock market volatility heightened the appeal of insured retirement accounts with guaranteed returns. Next, let's examine some historical data to see if we can put this performance in perspective.

The composition of the share portfolio has markedly shifted over the last several years, as consumers placed more resources into higher-yielding accounts such as share certificates and money markets. Money market funds now account for nearly 20% of the total credit union share portfolio.

To bring the analysis down to a more specific level, you might want to combine your outside knowledge with the data trends to come up with a way to apply the information to your credit union's marketplace. For instance, what if you were curious to see if there was a difference between the share portfolio compositions for states with a younger population vs. states with an older population? According to the U.S. Census Bureau, Utah and Texas have the youngest population in the country, with a median age of 27 and 32 years old respectively. Florida and West Virginia are reported to have the oldest population, each with a median age of 39 years old.

At first glance, West Virginia's share portfolio is strikingly different from the rest, with regular shares making up nearly 45% of the total portfolio, and money market accounts barely registering. If we wanted to identify a specific opportunity for a particular WV credit union, we could drill deeper into the data, examining the share portfolios for credit unions in a specific asset category or region within the state. Considering the strong growth that money market accounts are experiencing on the national level, this raises interesting questions, such as: "Is there a specific opportunity for WV credit unions to promote their existing money market accounts or begin to offer them if they don't already?"

Analyzing industry trends, and specifically drilling down and analyzing the performance of your credit union relative to peers, can help your management team and board understand crucial facts and drive more informed planning decisions.

In many of our data articles, we typically examine national credit union industry trends, but realize that many people are interested in using the data to measure their credit union's performance by benchmarking against peers in a specific geographic region or similar asset size. Callahan is hosting several complimentary webinar events that are designed to demonstrate how you can dig deeper with your analysis, examine the data from new angles, and clearly identify possible challenges and promising opportunities facing your credit union.

If you are interested in learning how to develop analytical frameworks to evaluate your credit union's deposit performance, join us for a 30-minute webinar on July 16th. This event is free but advance registration is required.