3 Takeaways From Trendwatch 3Q 2014

Third quarter performance demonstrates how commitment to members is helping credit unions deliver better value.

On Wednesday afternoon, Callahan & Associates hosted its quarterly Trendwatch webinar, an analysis of 5300 Call Report data that contextualizes industry performance and showcases strategies to emulate.

The review of third quarter data highlighted several areas in which credit unions are turning out impressive performance; here are three:

1. Member growth hits 3.1%.

Credit unions hit the 100-million-member mark during 2014, but they’re not slowing down. Share draft penetration and number of accounts are still on the rise penetration hit 53.9% with more than 54 million accounts indicating more members are making credit unions their primary financial institution.

What’s more, members are also strengthening their borrowing relationships with credit unions. More than 17% of members have an auto loan with their credit union and 16.5% have a credit card.

Purdue Federal Credit Union in Lafayette, IN, rewards member loyalty through its My Member Perks program. Based on the products and services they use, members earn bronze, silver, gold, or diamond status and can take advantage of benefits that include cash, points, and rate bumps.

2. Auto loan balances are up 16% year-over-year.

New auto loan balances are up nearly 20% year-over-year while used auto lending is up 12.5%.

Interestingly, the auto portfolio is now almost evenly split between direct and indirect loans. As of Sept. 30, credit unions held $114.8 billion in direct loans an 8.1% increase over this time last year and $110.4 billion in indirect loans a 23.2% increase over third quarter 2013.

The impressive growth in the indirect channel shows the opportunity credit unions have to form partnerships with local car dealerships and turn auto loan holders into full-fledged credit union members, says Andrew Bolton, senior industry analyst for Callahan & Associates.

Credit unions are also capturing their highest shared of the auto finance market since 2009. As of Sept. 30, year-to-date market share was 15.7%. That’s an improvement over the 14.7% captured in 2013 but is still not quite at 2009’s 20.6% high.

3. Over the past four years, credit unions have converted to state charters at double the rate of federal charters.

The last year in which state-to-federal charter conversions outpaced federal-to-state conversions was 2010. In 2011 and 2013, federal-to-state charter conversions reached into the double-digits.

One factor that is contributing to this trend is the regulatory innovation occurring at the state level. For example, In July, an amendment to the Illinois Credit Union Act took effect that requires state regulators to adopt rules that ensure consistency and due process in the examination process. And in Ohio, the league is reorganizing chapters around topics such as compliance, investments, and ALM rather than region to spur collaboration among the state’s financial cooperatives and help the industry overcome challenges.

It’s not too late to participate. Attend day 2 of Trendwatch to learn more about what’s happening in the industry weeks before the official data release. Trendwatch is available on CreditUnions.com for Callahan Leadership clients to watch on demand.

November 12, 2014

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