Glatt Consulting Credit Union Industry HealthScore Jumps 9.7%

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

Score Trends

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.

HealthScore Q1 2012 - Trend
HealthScore Q1 2012 – Trend

Score Distribution

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
Minimum HealthScore 3.455 0.273 0.273
Maximum HealthScore 4.727 1.545 4.727
Total CUs 802 855 7,165
Total Assets $452B $8B $1T
Average Assets $564M $9M $142M
Max Assets $48B $374M  $48B
Min Assets $1.9M $3K  $3K
% 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.

HealthScore Q1 2012 - Distribution
HealthScore Q1 2012 – Distribution

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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s