HealthScore Update

The current credit union industry HealthScore, updated to include 3rd quarter 2021 credit union performance data, is 6.333. The latest score represents a 3.24% year-over-year improvement. Learn more about this quarter’s score report.

When we created the HealthScore model, we looked at credit union performance over a two-decade time frame. A score of five in a given category is indicative of average performance, meaning that if the industry is near five the industry is performing as expected in terms of historical standards. That is helpful to know when we consider this quarter’s trends.

Here are a few notable items to point out from this quarter’s report.

Scores for Return on Assets were below five for six straight quarters before rising above five in Q3. Efficiency, which tracks how much a credit union spends relative to income, also rose above five this quarter after experiencing similar sub-five scores.

This happens when income increases and expenses stay flat or decline, or when income stays flat and expenses decline, or when income increases faster than expenses. In this case, we seem to be seeing increasing income and more stable operating expenses. More on that rise in income below.

The score for Loans to Assets is below five for the third straight quarter. We haven’t had scores this low since during and immediately after the Great Recession. This trend of sub-five scores is of course driven by outsized deposit growth against middling loan growth. As an aside, the score for deposits per member, which is 7.38, is the highest we’ve ever seen in our data. If you are curious, the lowest score in our dataset was 2.56 in the second quarter of 2002.

Credit quality metrics have also improved substantially, with scores of 7.41 and 7.77 for delinquent loans and charge offs respectively – well above the five threshold. This is helpful context for understanding risk today. Scores for delinquency and charge off in 2008, when credit union performance was at its worst during the Great Recession, reached lows of 4.16 and 4.52 respectively.

Fears of this kind of scenario prompted a number of credit unions to aggressively fund allowance for loan loss accounts during the early days of the COVID pandemic. These fears have proved unfounded for a number of reasons, and now many credit unions are reducing allowance account balances. Incidentally, this has helped spur improvements in the return on assets scores noted above. In fact, 20% of all credit unions in Q3 pulled funds from allowance accounts.

There is a lot more to consider in this month’s data, but rather than recap everything we encourage you to subscribe for free to receive your own detailed HealthScore report. We also invite you to visit our HealthScore page for additional score trend data.

Q3 2021 Industry Leader

Kudos to this quarter’s top performer! Police & Fire FCU out of Philadelphia, with assets of $7B and over 400,000 members, had the highest aggregate HealthScore this quarter with a score of 9.00. Very impressive performance.


Photo by William Daigneault on Unsplash

Published by Tom Glatt Jr

Owner of Glatt Consulting - Distinctive Strategy Consulting for Credit Union Leaders.

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