Credit Union Community Hits Highest Ever HealthScore

Trend Chart

Wilmington, NC (June 11, 2019) – Credit union strategy consulting firm Glatt Consulting Group, Inc. announced today that the Credit Union Industry HealthScore, a composite score measuring the health and performance of US-based credit unions, reached an all-time high score of 6.041. The current HealthScore, calculated using 1st quarter 2019 data, represents a 1.6% year-over-year score improvement. Credit unions performed better in 12 of 17 HealthScore categories, though potential challenges in the areas of loan and membership growth may be emerging.

The Credit Union Industry HealthScore measures overall credit union health, which is calculated by scoring/grading credit union performance across 17 different key ratios. Grading is based on a 10-point scale, with 0 reflecting poor performance and 10 reflecting exceptional performance. The Credit Union Industry HealthScore has been calculated and published by Glatt Consulting since 2009.

Driving Score Growth

In addition to attaining the highest ever HealthScore, credit unions continued their unprecedented run of year-over-year performance improvement. Scores have improved year-over-year for 21 straight quarters, with 12 of 17 of the score components showing positive gains. Notable score drivers include Return on Assets, Efficiency, Delinquencies, Charge-Offs, and Loans to Assets. In addition, credit unions continue to show improvement in Borrowers to Members, which indicates effectiveness in member relationship development and is directly correlated with the improvements in scores referenced above.

Q1 Observations

While credit unions are managing expenses well relative to current income, they may have a difficult time maintaining that positive relationship going forward given two emerging score issues: Q1 score declines of 10.37% and 3.20% respectively for loan growth and membership growth. Should score declines for these two components continue over the coming quarters, score declines for income and efficiency may materialize, and the trend of decline in operating expense scores will continue. This will put pressure on the HealthScore overall and could break the streak of year-over-year score improvement.

Top Performers

The industry’s highest scoring credit union in the 1st quarter, with a score of 9.06, was Little Rock Fire Department Federal Credit Union based in Little Rock, Arkansas (http://lrfdfcu.virtualcu.net). The credit union holds assets of $13M and serves approximately 764 members. The credit union is a reflection of the strength typical of credit unions serving firefighters. Such credit unions out-performed the industry overall with an average HealthScore of 6.23 vs. the industry score of 6.041. Firefighters are apparently a sound field of membership.

Also of note is Eastman Credit Union based in Kingsport, Tennessee (https://www.ecu.org). Eastman, with a Q1 score of 8.529, is the top-scoring credit union with assets over $1B. The credit union is also a perennial top performer with a historical average score of 8.03. They serve 228,017 members.

Summary HealthScore Data

With regard to score trends, 12 of the 17 HealthScore components saw year-over-year score gains. They are:

  1. Net Worth: Up 1.93%
  2. Solvency Evaluation: Up 2.38%
  3. Return on Average Assets: Up 9.81%
  4. Efficiency: Up 5.56%
  5. Delinquent Loans to Total Loans: Up 3.19%
  6. Net Charge-Offs to Average Loans: Up 1.23%
  7. Texas: Up 0.30%
  8. Loans to Assets: Up 6.35%
  9. Deposits Per Member: Up 1.69%
  10. Loans Per Member: Up 5.08%
  11. Borrowers Per Members: Up 2.78%
  12. Asset Growth: Up 0.77%

Components that saw a year-over-year decline in score include:

  1. Operating Expenses to Average Assets: Down 3.39%
  2. Cash and Short-Term Investments to Assets: Down 2.60%
  3. Regular Shares to Total Shares and Borrowings: Down 1.13%
  4. Loan Growth: Down 10.37%
  5. Membership Growth: Down 3.20%

About Glatt Consulting Group

Glatt Consulting Group, Inc. is a credit union consulting company based in Wilmington, NC. Founded in 2006, Glatt Consulting specializes in aiding credit unions in areas including strategy, organizational structure, governance, and leadership development.

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Special Offer: HealthScore Report + Key Financial/Ratio Data

Special Q1 report and data offer! For $100 get a HealthScore Report on your credit union, and a spreadsheet containing key Q1 financial and ratio data for all federally-insured credit unions. Your credit union’s executives and volunteers alike can use the HealthScore report to benchmark performance against industry leaders and laggards at national, asset peer, state, and local levels – and use the spreadsheet to rank and research individual credit union performance according to your own interests.

To order the HealthScore report and spreadsheet for your credit union, simply complete the form below. We will process your order and invoice you for the balance, which you can pay either by check or credit card. The invoice and data files will be delivered electronically via email.

Photo Credit: “Data” by justgrimes is licensed under CC BY 2.0

 

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