North Dakota Credit Unions Outrival Peers

Credit unions in the Roughrider State are eclipsing others in most performance metrics, but they have ample opportunity to improve member growth.

North Dakota is riding a wave of economic success since oil was discovered in the Bakken formation that lies under most of the state. The 42 credit unions in the state, ranging in asset size from $1 million to $400 million, are taking advantage of this opportunity and are pumping out record numbers of their own.

The statistics coming out of North Dakota are astonishing.Unemployment is the lowest in the nation at 3.0%, permanent housing is in short supply, and the average rent in towns near the oil fields is comparable to Manhattan.

Due to this unforeseen oil boom, credit unions located in North Dakota are enjoying financial performance that they’ve never seen before. The state reported loan growth of 13.7%, more than four times higher than the national growth of 3.1%. North Dakota came in first in the nation for loan growth, outpacing the second-place Oklahoma by more than 3.5%, according to Callahan & Associates 2013 Credit Union Directory.

As housing is in hot demand, first mortgage loans were the fastest growing segment of the loan portfolio, up 18.2%. At Dakota Plains Federal Credit Union($49.5M, Edgeley, ND), first mortgage loans were up 37.4% and member business loans increased 52.7%. It’s the type of success credit unions across the state are experiencing.

Source: Callahan & Associates 2013 Credit Union Directory

In addition to loan growth, North Dakota was a top performing state in share growth and asset growth in the second quarter. Its 13.2% share growth is the highest second-quarter growth in the state’s history, led by Tolna Co Op FCU ($1.5M, Tolna, ND), with share growth of 37.4%. Assets in the state grew 13.7% to $2.8 billion.

Beyond growth metrics, North Dakota reported a delinquency rate of 57 basis points, second only to New Hampshire. Nine of North Dakota’s 42 credit unions reported no delinquent loans meaning 21.4% of credit unions in the state have no delinquent loans. The state’s ROA of 1.15% is up 38 basis points from June 2011, and ranks fifth in the nation, according to the 2013 Credit Union Directory.

Although North Dakota credit unions are reporting outstanding performance in many areas, they rank 25th for member growth. North Dakota reported member growth of 2.3%, matching the national average. The average member growth runs counter to the state’s own population growth, which is growing significantly as oil projects are attracting swarms of jobseekers. These trends indicate that much of North Dakota credit union’s noteworthy growth in loans, shares, and assets is from within their own memberbase.

So, if credit unions there focused on turning the influx of new residents into credit union members, they could have the potential to grow their balance sheets even further. Though the oil boom will not last forever, credit unions in North Dakota are making the most of this unprecedented opportunity.

May 29, 2014

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