The Glatt Consulting Credit Union Industry HealthScore for Q1 2012 improved to 2.464, a 9.7% increase from Q4 2011 and a 3.19% increase from Q2 2011. Driving the improved industry score were substantial increases in the scores for asset and membership growth, both components of the industry-wide score. The HealthScore has fluctuated at levels below 2.40 since mid-2008 on challenges stemming from slow U.S. economic growth and consumer lending demand, and the lingering cost of corporate credit union failures. The industry’s highest score, 3.195, came in Q3 2001. The lowest score of 2.148 was recorded in Q1 2009.
The asset growth component score of 3.168 reflects an 81% improvement over the Q4 2011 score and a 12.4% improvement over the Q3 2011 score. A full 89% of credit unions experienced growth in this area, growth that pushed credit union assets above $1 trillion.
While the membership growth component score of 1.155 was an improvement of 41% over the Q4 2011 score and a 23% improvement over the Q3 2011 score, it is important to note that 45% of all credit unions experienced declining membership growth. This data highlights that fact that a minority of credit unions are responsible for industry health improvements in this area, and that strong sustainable membership growth continues to be a challenge for the broader credit union community.
Glatt Consulting’s Credit Union Industry HealthScore is a composite performance score reflecting the overall financial health of U.S. credit unions. The score range is based on a 5-point scale, with 5 being the most healthy and 0 being the least healthy. The score is comprised of eleven specific measurements of credit union performance.
Additional Score Trends and Data
The following chart showcases quarterly industry HealthScores from 2002 to 2012. Q1 2012 scores indicated a possible reversal of the long-term trend of declining industry health. Click image to enlarge.
The highest composite HealthScore of 4.727 is held by a credit union in Tennessee. The lowest score, 0.273, is held by a credit union in Pennsylvania.
There are 855 credit unions in the 10th percentile, meaning a composite score equal to or less than 1.545. Total assets for this group of credit unions is $8.0B, or .78% of all credit union assets, which is a decrease of $900M over Q4. The largest credit union on the list has assets in excess of $374M, the smallest is slightly less than $3K.
There are 802 credit unions in the 90th percentile, meaning a composite score equal to or greater than 3.455. Total assets for this group of credit unions is $452B, or 44% of all credit union assets, which is a decrease of $14B over Q4. The largest credit union on the list has assets in excess of $48B, the smallest is slightly more than $1.9M.
The following table illustrates various score and asset information for the 90th and 10th percentiles as well as the entire credit union community. The table also includes component score comparisons between these groups.
|90th Percentile||10th Percentile||All CUs|
|% of Total CU Assets||44.58%||0.78%||NA|
|Average Composite Score||3.733||1.262||2.464|
|Average Asset Growth Score||3.989||1.877||3.168|
|Average Charge Off Score||3.648||1.986||2.924|
|Average Delinquency Score||3.753||1.211||2.754|
|Average Deposit Score||4.753||1.621||3.561|
|Average Efficiency Score||2.793||0.092||0.900|
|Average Expense Score||3.406||1.931||2.791|
|Average Loan Score||4.506||0.841||2.701|
|Average Liquidity Score||3.904||0.952||2.135|
|Average Member Growth Score||2.213||0.525||1.155|
|Average Net Worth Score||3.470||2.477||2.939|
|Average Earnings Score||4.625||0.366||2.072|
The greater concentration of credit unions is in the 2.0-2.9 score range followed by the 3.0-3.9 score range as illustrated in the chart below. The upward shift in scores from Q4 to Q1 suggests a solid improvement in general credit union health. Click image to enlarge.
More About the Glatt Consulting Credit Union Industry HealthScore
Glatt Consulting is often called upon to aid credit unions in strategy development, including merger strategy. The HealthScore system was developed in 2008 as a means to quickly identify and rank the overall “health” of potential merger candidates on behalf of client credit unions. The use of the HealthScore system has since been expanded to support client engagements outside of merger strategy, including as a reference tool for client strategy planning and assessment. To inquire about using the HealthScore at your credit union contact Glatt Consulting at (888) 217-5988, or complete our online contact form.
Visit the HealthScore page for additional background on the creation of the scoring system.