Branch Population Holds Steady While Productivity Rises

Advances in staff and technology underpin credit unions' ability to serve more members per location, and the numbers show it.

 
 

A data-driven look at credit union branching tells a tale of three trends: Fewer institutions, steady branch numbers, and heightened productivity.

Although the number of credit unions nationwide has shrunk notably in the past decade, the total number of branches has not. In mid-2008, there were 8,161 credit unions in the United States that had a combined 21,162 branches. By mid-2018, there were 5,596 credit unions with 21,064 branches.

 

 

In the past decade, as the economy went through the Great Recession and subsequent recovery, the number of credit unions shrunk 31.4%. The number of branches fell just 0.01%.

In the past year, from the second quarter of 2017 to the second quarter of 2018, the branch count grew by 66 to 21,064, whereas the number of credit unions fell 219 to 5,596, according to data from Callahan & Associates. Four hundred and nine credit unions increased the number of branches they operate; 225 credit unions decreased their branch numbers. As the table below shows, every asset band had more credit unions that increased their number of branches.

CREDIT UNIONS WITH CHANGING BRANCH NUMBERS

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18
© Callahan & Associates | www.CreditUnions.com
Asset Class Credit Unions With More Branches Credit Unions With Fewer Branches Net Change
<$100M 101 76 +25
$100M-$250M 67 51 +16
$250M-$500M 66 31 +35
>$1B 121 39 +82
Total 409 225 +184

Source: Callahan & Associates.

2018 Callahan & Associates, Inc. All rights reserved

The reduction in the number of credit unions, not reciprocated by that of branches, has accompanied an emerging capacity of surviving institutions to scale their operations to a growing membership. They’re doing that through digital offerings, branch efficiency software, ITMs, and universal employees. And even as the credit union employee base expands, productivity metrics are hitting new highs.

For example, the number of full-time equivalent employees in the industry has grown every year since 2010 and totaled 298,785 as of the second quarter of 2018. Year-over-year employee growth was 3.9% as of June 30, and the number of employees per branch jumped from 13.7 to 14.2.

At the same time, annualized total revenue per employee was up 8.9% year-over-year to $240,729. That’s an all-time high. Ten years ago, in the second quarter of 2008, it was $221,748.

Click the tabs below to view graphs.

ASSETS PER BRANCH

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18

Assets per branch at America's credit unions has risen nearly 80% in the past 10 years.

MEMBERS PER BRANCH

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18

More members and fewer branches means more members per branch, from 4,200 in second quarter 2008 to 5,500 in second quarter 2010.

ACCOUNTS PER BRANCH

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18

The accounts per branch metric comprises loans and savings. It has risen nearly 40% in the past 10 years, a sign of increased productivity.

TOTAL REVENUE PER EMPLOYEE

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18

After dipping for several years, total revenue per employee at U.S. credit unions has risen sharply in the past four years.

ACCOUNTS PER EMPLOYEE

FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.18

Another indicator of increased productivity is accounts per employee, which is up nearly 10% from mid-2008 to mid-2018.

Credit unions reported similar trends in loan originations per employee, which is another key performance indicator. The industry’s 5,596 credit unions originated a record $1.7 million in annualized loans per full-time equivalent employee. That’s 52.9% more than the $1.1 million in loans per FTE the industry recorded in the second quarter of 2008.

Other metrics that have significantly increased in the past 10 years and that speak to this advancing productivity include accounts per employee, up from 865 to 974; accounts per branch, up from 9,827 to 13,816; assets per branch, up from $38.5 million to $68.7 million; and members per branch, up from 4,215 to 5,477.

That relative productivity per branch comes from branch numbers growing at a slower rate than members, loans, and shares among other fundamental credit union metrics. This raises the question: Are branches still vital for credit unions to create value and service? If yes, how long will branches stay that way?

The answer is different for each credit union, but the number of branches does not appear to hinder, nor determine, the number of members a credit union can serve. How an institution uses staff, technology, and innovation seems to be more of a determinant in that regard.

This article appeared originally in the Credit Union Times in October 2018.

 

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Oct. 15, 2018


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