Credit Union Community Continues Streak Of Year-Over-Year HealthScore Gains

Wilmington, NC (September 17, 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, extended its streak of posting year-over-year increases for the 22nd consecutive quarter with a score of 6.006. The current HealthScore, calculated using 2nd quarter 2019 data, represents a 1.25% year-over-year score improvement. Credit unions performed better in 13 of 17 HealthScore categories. Despite the strength of the overall HealthScore, the continuing decline in scores for both Loan Growth and Membership Growth present challenges that may extend to other categories in the future.  

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

Credit unions continued their unprecedented run of year-over-year performance improvement. Industry HealthScores have now improved year-over-year for 22 straight quarters, with 13 of 17 of the score components showing positive gains. Some notable score drivers include Return on Assets, Efficiency, Asset Growth, and Cash & Short-Term Investments, which posted year-over-year growth for the first time in two years. It will be interesting to see how the Cash & Short-Term Investments component performs in the coming quarters with the flattening yield-curve environment that currently exists.

Q2 Observations

Loan Growth and Membership Growth once again experienced year-over-year weakness with scores down 20.95% and 7.36% respectively versus Q2 2018. Continued weakness in these two components would likely result in the eventual declines of other components such as Income and Efficiency. The continued strength in Loans Per Member and Borrowings Per Member could help insulate credit unions from the effects of declines in Loan and Membership Growth in the short-term. However, any prolonged weaknesses in these two membership components would eventually present a myriad of operational challenges.  

Top Performers

The industry’s highest scoring credit union in the 2nd quarter, with a score of 9.12, was Churchill County Federal Credit Union based in Fallon, Nevada (https://myccfcu.org). The credit union holds assets of $51M and serves approximately 2,800 members. The credit union regains the top spot in the 2nd quarter after having the highest HealthScore for both the 3rd and 4th quarters of 2018. Keep up the great work!

Once again, Eastman Credit Union based in Kingsport, Tennessee (https://www.ecu.org) is the top-scoring credit union with assets over $1B with a Q2 score of 8.53, followed closely by Redwood Credit Union based in Santa Rosa, California with a score of 8.5. These two credit unions are perennial top performers who serve 232,747 and 265,237 members respectively.

Summary HealthScore Data

With regard to score trends, 13 of the 17 HealthScore components saw year-over-year score gains. They are:

(1) Net Worth: Up 1.88%
(2) Solvency Evaluation: Up 2.67%
(3) Return on Average Assets: Up 13.54%
(4) Efficiency: Up 7.12%
(5) Delinquent Loans to Total Loans: Up 1.51%
(6) Net Charge-Offs to Average Loans: Up 1.74%
(7) Texas: Up 0.20%
(8) Cash and Short-Term Investments to Assets: Up 1.92%
(9) Loans to Assets: Up 4.74%
(10) Deposits Per Member: Up 1.64%
(11) Loans Per Member: Up 4.25%
(12) Borrowers Per Members: Up 2.28%
(13) Asset Growth: Up 2.21%

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

(1) Operating Expenses to Average Assets: Down 3.95%
(2) Regular Shares to Total Shares and Borrowings: Down 1.46%
(3) Loan Growth: Down 20.95%
(4) Membership Growth: Down 7.36%

A HealthScore data report, including the top 20 credit unions by HealthScore, is attached to this release. We’re happy to serve as a resource on articles related to overarching industry performance, and we welcome your use of the trend material, properly credited to Glatt Consulting. If you have questions about this quarter’s report or CU industry trends overall, contact me at mgriffiths@glattconsulting.com or (888) 217-5988, ext. 802.

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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Image by Gerd Altmann from Pixabay

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.

The Next Branch? Maybe Not the Best Idea!

Lightbulb representing ideas
We recently saw a press release from a mid-sized credit union touting the launch of its latest new branch. You would think that a credit union highlighting yet another branch (they have a few) would be doing so after generating amazing results with the ones it already had. Well … not the case.
The chart below highlights the credit union’s HealthScore trends over the last few years. Keep in mind our HealthScore scale is 0-10 with 10 being high performing – and the industry average is 5.862.


And how about the table of results highlighting their component scores below? Low scores for earnings, operating expenses, and efficiency … and also for growth. High scores for some relationship metrics, but also an indication of concentration risk. This is probably not the best time to expand the branch network. Rather, this credit union should be working on cost reduction strategies along with strategies to drive deeper member relationships. All they did with this latest decision was add cost on top of cost. A rather risky proposition.

HealthScore Trend Table

Visit https://www.glattconsulting.com/healthscore/healthscore-trends to see additional details regarding score acronyms and trends.

Cycle_Date HS NW SE RA OE EF DL CO TX CS RS LA DM LM BM AG LG MG
03/31/2004 4.4706 7.5 7 3.5 2 6 3 1 9 6 3.5 4.5 4 4.5 6 8.5 0 0
06/30/2004 4.0882 7.5 7 3 2 6 2.5 1 9 6 4 5.5 4 4.5 6.5 0 1 0
09/30/2004 4.4412 7.5 7 4.5 2 6.5 2 1.5 8.5 5.5 4 5.5 4 4.5 6.5 1.5 4.5 0
12/31/2004 4.4412 8.5 7.5 5.5 1.5 7 2 1.5 8.5 2.5 4 6 4 5 7 0 5 0
03/31/2005 5.5588 8 7 8 1.5 8.5 2 1 9 7 4 5.5 4 4.5 6.5 9.5 0 8.5
06/30/2005 5.0294 8.5 7.5 8.5 1.5 8.5 2 1 8.5 5 4 6 4 4.5 6.5 4 0 5.5
09/30/2005 4.9706 9 8 8.5 1.5 8.5 2 1 9 6 4 6 4 4.5 6.5 2.5 0 3.5
12/31/2005 4.5588 9 8 8.5 1 8.5 2.5 1 9 2.5 4 6.5 4 5 5.5 0 2.5 0
03/31/2006 5.6765 9 7.5 5.5 1 6.5 3.5 1 9 4 4 6.5 4 5.5 5.5 10 10 4
06/30/2006 5.4706 9 7.5 6 1 7 3.5 1 9 1.5 4 7 4 5.5 5.5 6.5 10 5
09/30/2006 5.0882 9.5 8.5 6 0 7 4 1 9 1 3.5 7.5 3.5 6 5.5 1 9.5 4
12/31/2006 5.3529 9 8 6.5 1 7 3 1.5 9 3 3 7 4 5.5 5 6 7.5 5
03/31/2007 4.9706 9 8 5 1 6.5 3.5 1.5 9 4 3 6.5 4 5.5 5 4.5 0 8.5
06/30/2007 4.9412 9.5 8.5 2.5 7 6 3 1.5 9 4 3 7 4 5.5 4.5 0 2 7
09/30/2007 4.5294 9.5 8.5 5 1 6 2.5 1.5 9 3.5 3 7.5 3.5 5.5 5 0 2.5 3.5
12/31/2007 4.5 10 9 6 1 6.5 1.5 1 8.5 3 3 8 3.5 6 5 0 4.5 0
03/31/2008 5.1176 10 9 9 1 6.5 2 1.5 9 4.5 3 7.5 4 6 5 9 0 0
06/30/2008 4.8235 10 9 8 1 6.5 1.5 1.5 8.5 3.5 3 7.5 4 6 5 7 0 0
09/30/2008 4.6765 10 9.5 8 0 7 1 1.5 8.5 3 3 7.5 3.5 6 5 2.5 0 3.5
12/31/2008 4.5 10 10 7 1 7 1 1 8 3.5 3 7.5 4 6 5 2.5 0 0
03/31/2009 4.7353 9.5 9 5.5 1.5 8.5 0 1 7.5 4.5 2.5 6.5 4 6 4.5 10 0 0
06/30/2009 4.3824 9.5 9.5 0 0 8.5 0 0 7.5 6 2.5 6.5 4.5 6 4.5 9.5 0 0
09/30/2009 4.8235 10 9.5 9 1 9.5 0 0 7.5 5 2.5 6.5 4.5 6 4.5 6.5 0 0
12/31/2009 4.6471 9.5 9 6 1.5 9.5 0 0 7.5 5.5 2.5 6.5 4.5 6 4.5 6.5 0 0
03/31/2010 4.5294 9 9 2.5 1.5 8.5 0 0 7.5 4.5 2.5 6 4.5 5.5 4 8 0 4
06/30/2010 4.0294 8 8 0 1.5 9 0 0 7.5 2.5 2.5 5.5 5 5.5 4 8 0 1.5
09/30/2010 4.0294 8 8 0 1.5 9 0 0 8 2.5 2 5 5 5 4 6 0 4.5
12/31/2010 4 8 8 0 1.5 8 0 0 8 4.5 2 5 5 5 4 5.5 0 3.5
03/31/2011 3.6765 8 8 1 1.5 7 1 0 8.5 2.5 2 4.5 5 5 4 4.5 0 0
06/30/2011 3.5882 8 8 3 1.5 7 1.5 0 8.5 1.5 2.5 4 5 4.5 3.5 2.5 0 0
09/30/2011 3.7353 8 8 1.5 1.5 6.5 1.5 0 9 3.5 2.5 4 5.5 4.5 3.5 4 0 0
12/31/2011 3.9118 8 8 3 1.5 6.5 1.5 0 8.5 5 2 4 5.5 4.5 4 4.5 0 0
03/31/2012 4.8529 7.5 7.5 4.5 2 4 1.5 1.5 9 5 2 4 6 5 4 9.5 9.5 0
06/30/2012 4.5588 7.5 7.5 5 1.5 3.5 1.5 1.5 9 4.5 2 4 6 5 4 7 8 0
09/30/2012 4.4118 8 8 6 2 4 2 1.5 9 4 2 4 6 5 4 5.5 4 0
12/31/2012 4.1765 8 8 6 1.5 4 1.5 1 9 4 2 4 6 5.5 4.5 3 3 0
03/31/2013 3.8235 8 7.5 0 1.5 0 1.5 1.5 8.5 6 2 3.5 7 5.5 4 8.5 0 0
06/30/2013 3.4412 8 7 1.5 1 1 1.5 1.5 9 3.5 2.5 3.5 6.5 5.5 4 2.5 0 0
09/30/2013 3.2941 8 7.5 1 1 1 1.5 1.5 8.5 1 2.5 4 6.5 5.5 4.5 1 1 0
12/31/2013 3.3529 8.5 7 1 1 1.5 1 1.5 8.5 0 2.5 4.5 6.5 6 4.5 0 3 0
03/31/2014 4.0882 8 7 0 1.5 2 2.5 1 9 1.5 2.5 4.5 6.5 6 4.5 8 0 5
06/30/2014 4.1471 8 7.5 0 1.5 2 2.5 1 9 1.5 2.5 4.5 6.5 6 4.5 5 2 6.5
09/30/2014 3.7941 8 7.5 0 1.5 3 2.5 1.5 9 1.5 2.5 4.5 6.5 6 4.5 1 2.5 2.5
12/31/2014 3.9118 8.5 7.5 0 1.5 3 3 1.5 9 1 2.5 5.5 6 6.5 4.5 0 6.5 0
03/31/2015 4.0882 8 7.5 0 1.5 3.5 3 1 9 2.5 2.5 5 6.5 6.5 4.5 8.5 0 0
06/30/2015 4.0588 8 7.5 0 1.5 4.5 4 1 9 2.5 2.5 5.5 6.5 6.5 4.5 2 3.5 0
09/30/2015 4.0882 8.5 8 0 1.5 4 3 1.5 9 3 2.5 6 6.5 6.5 4.5 1 4 0
12/31/2015 4.0294 8.5 7.5 0 1.5 4 3 1.5 9 3 2.5 6 6.5 7 4.5 1 3 0
03/31/2016 4.2941 8 7.5 1.5 2 3.5 2.5 2 9 4 2.5 5.5 7 7 4.5 6.5 0 0
06/30/2016 4.1765 8 8 1.5 2 3.5 2.5 2 9 4 2.5 5.5 7 7 4.5 4 0 0
09/30/2016 4.2059 8 8 1.5 2 3 4 2 9 4 2.5 5.5 7.5 7 5 2.5 0 0
12/31/2016 4.0294 8.5 7.5 1 2 3 4 2 9 3.5 2.5 5.5 7.5 7.5 5 0 0 0
03/31/2017 4.2647 8.5 7.5 0 2 2.5 4 2 9 3.5 2.5 5.5 8 7.5 5 3.5 1.5 0
06/30/2017 4.2353 8.5 7.5 1 2 2.5 3.5 2 9 4 2.5 5.5 8 7.5 5 1.5 2 0
09/30/2017 4.2941 8.5 8 1 2 2.5 4.5 2 9.5 4 2.5 6 7.5 7.5 5 0 2.5 0
12/31/2017 4.2059 8.5 7.5 1 1.5 3 4 2 9 4 2.5 6 8 7.5 5 0 2 0
03/31/2018 4.9118 8.5 7.5 0 1.5 4 4 2 9 3.5 2.5 6 7.5 7.5 4.5 0 5.5 10
06/30/2018 4.4412 8.5 7.5 1.5 1.5 4 5 2 9 4 3 6 8 8 5 0 2.5 0
09/30/2018 4.3235 9 8 1.5 1.5 4 5 2 9 4 3 6 7.5 8 5 0 0 0
12/31/2018 4.2647 9 8 1 1.5 3.5 4.5 2 9 4 3 6 8 8 5 0 0 0

The State With The Highest HealthScore Is…

We recently released our Q4 2018 HealthScore which involves sending custom reports to report subscribers, publishing our summary report on the health and performance of US credit unions, and updating our industry score trends pages over on the main GC website. One of the new datasets we’re starting to dig into now is credit union health on a per-state basis. We thought you might like to see the aggregate data.

As a reminder, the HealthScore is a composite financial performance score reflecting the financial health of US-based credit unions. Our HealthScore system/database calculates overall credit union health by scoring/grading credit union performance across 17 different key ratios on a ten-point scale with 10 indicating the highest possible performance. The table below showcases the average scores for credit unions in each state. As you’ll note in the table, Nevada has the highest score of 6.814.

Is that a good score? It’s really good. Generally individual credit unions with HealthScores of 5-5.5 are average – which means stable, sound, etc. Credit unions with scores above 6 are doing many things right if not exceptionally well – and states with scores above 6 indicate that the state is populated with an abundance of such credit unions.

Nevada’s current level of performance is much improved as compared to the recession-era timeframe. The state reached a low-point in the fourth quarter of 2010 with an average HealthScore of 4.51. It is definitely a new day in Nevada – as it is in almost all of the states that suffered the most during the recession.

So… how is your state doing? Take a look below. And, if you are a credit union volunteer or employee and are interested in receiving a free report on your credit union, sign up here.

State Average HealthScore
NV 6.814
WA 6.737
OR 6.666
UT 6.465
ME 6.458
MN 6.452
ND 6.379
NM 6.374
CO 6.289
WI 6.233
SD 6.224
NH 6.194
CA 6.186
MT 6.182
WY 6.180
AK 6.129
ID 6.111
IA 6.082
FL 6.046
MA 6.042
SC 6.024
TN 6.017
RI 5.988
KY 5.985
HI 5.968
VT 5.949
MI 5.948
GA 5.873
TX 5.842
AZ 5.836
MD 5.836
PR 5.807
OK 5.790
NE 5.787
IN 5.760
MO 5.751
NY 5.735
WV 5.731
IL 5.683
GU 5.676
AL 5.655
PA 5.643
AR 5.622
VA 5.605
OH 5.596
NC 5.573
KS 5.572
MS 5.531
LA 5.491
DC 5.480
CT 5.285
NJ 5.264
DE 5.083
VI 4.724

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