The Membership Growth Problem: Asset Group Breakdown

Average Membership Growth by Asset Peer Group: Q2 2012

We have had an amazing response to our post entitled The Credit Union Membership Growth Problem, a response that has included the submission of a number of questions. Over the next few days we will work to address a few of these questions starting with this one: Are membership growth problems relegated to credit unions of certain sizes? The short answer is…

Yes! Before we dive into the details of our findings, however, it will help to shed light on what we mean by size, and what small is relative to large when we talk about size. In this particular case we are using assets to define size, and credit union assets range from approximately $20K to $49B. This is an extreme range, with the largest credit union over 2,000,000 times greater in size than the smallest credit union. Because of the breadth of the size range, it is beneficial to reflect on membership growth amongst like-sized credit unions, averaging growth for all credit unions within certain asset group categories and then comparing the categories to one another. We decided to use the asset groupings created by the National Credit Union Administration to define asset peer groups, which are as follows:

  • Group 1: Credit unions with assets less than $2,000,000
  • Group 2: Credit unions with assets from $2,000,000 to less than $10,000,000
  • Group 3: Credit unions with assets from $10,000,000 to less than$50,000,000
  • Group 4: Credit unions with assets from $50,000,000 to less than$100,000,000
  • Group 5: Credit unions with assets from $100,000,000 to less than$500,000,000
  • Group 6: Credit unions with assets $500,000,000 or more

So to the data. The chart below shows average membership growth by asset groups.

Average Membership Growth by Asset Peer Group: Q2 2012

There are a number of striking realities illustrated in the chart. To begin with, very small credit unions (those in Groups 1 and 2) are dropping members at a high rate, with membership growth in Groups 1 and 2 at -1.47%  and -1.05 respectively. While the slightly larger credit unions in Groups 3 and 4 are at least growing, actual membership growth is much less compared to the larger-still credit unions in groups 4 and 5. At first glance, this data would appear to support the belief that size and membership growth have a well-defined relationship.

Delving into this issue a little deeper we find that of the 831 total credit unions in Group 1, 548 of them (66%) experienced negative membership growth in the second quarter. While Group 2 is performing somewhat better, we still see 951 (58%) of the 1,653 credit unions in this group losing members. In every other peer group at least the positive outweighs the negative, but again the percentage of those credit unions suffering negative membership growth lessens substantially as the asset range increases.

The table below illustrates this fact:

1 2 3 4 5 6
Total Credit Unions 831 1653 2336 819 1053 409
Total Credit Unions with Positive Growth 283 702 1207 514 736 334
Total Credit Unions with Negative Growth 548 951 1129 305 317 75
% of Credit Unions with Positive Growth 34% 42% 52% 63% 70% 82%
% of Credit Unions with Negative Growth 66% 58% 48% 37% 30% 18%
Average Membership Growth -1.47 -1.05 0.63 1.44 3.05 4.17

Regardless of how you parse the data, the fact of the matter is that the much-touted improvement in membership growth percentages is happening more at the largest credit unions than at the smallest. This is amazing when you consider what it takes for credit unions with many thousands of members to show such a high level of membership growth in percentage terms.

The challenge for smaller credit unions is to determine how to drive healthy, sustained membership growth. Absent viable solutions, these credit unions will shrink and eventually fail. To ignore the membership growth question, to shrink until competitiveness is unattainable, is a true disservice to existing members, not to mention to the many other key stakeholders connected to any given credit union – such as staff and the credit union community as a whole.

As we stated in The Credit Union Membership Growth Problem post, our desire is not to demean the efforts some are making to call attention to credit unions and to help them grow. We are simply concerned that the overly-positive coverage of recent membership growth masks a real growth problem, a problem that cannot be addressed through hoping that the rising tide of greater public awareness of credit unions will improve the membership growth rates for all credit unions.

Clearly many credit unions across all asset ranges are growing, and growing quite well. They have found a path to success that, while perhaps benefitting from general industry publicity, is not solely dependent on it. These are the successes we should extoll and define as inspiration to those that are struggling with growth rather than spend our time overly-fixated on the net impact of a singular effort.

In our next post, we will explore member growth by state. 


  1. Tom, this is a really great series. Thanks for digging so deep.

    Being a Canadian working in both the US and Canadian credit union industries, I am fascinated with the differences. In Canada, there are zero credit unions left under $25M and just a handful under $50M. Consolidation was rampant in the 1990s and early 2000s and has really tapered off here over the past 10 years. Perhaps some of that early consolidation is due to the shift from tax-exempt status to taxed in the 70s, but I keep wondering if it is just an inevitable end and if the US credit union industry should embrace the new reality rather than fight it so rigorously?

    Don’t get me wrong, I really like small credit unions and how close to the membership they are, in fact, I am a director of one of Canada’s smallest credit unions at $45M. But, I fear that the reliance on outside technology, the regulatory burden, the fight for expertise, the cost of doing business and the reality of what consumers want and need are outpacing the small credit union’s ability to keep up. The numbers you present seem to point in that direction.

    1. Tim… great comments that I generally agree with. I do think that small credit unions (in particular those that are currently struggling with growth) can survive but not with the “go it alone” business model. I like what I have heard discussed in small pockets regarding collaboration on back office functions (the areas of technology, compliance, etc. you mentioned in your comments), but not enough are talking the option through with any serious commitment. When I think about a truly collaborative back-office model I think of small credit unions owning the brand and member relationships but offloading the major back office functions and associated costs to a credit union-owned 3rd party in which they have an interest. Unfortunately too many CUs wait to address these major issues until its too late – and the only options then are to liquidate or merge out their identity.

  2. Tom — Great table of data regarding membership growth by asset tier. Would be interesting to see average growth rate of those with growth and average decline of those with shrinking members. There are always pockets of winners and losers in any group. Would be interesting to see characteristics of winners and losers. Keep up the good work!

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