A Tale of Two (Types of) Credit Unions

A Tale of Two (Types of) Credit Unions

A  combination of industry consolidation and membership growth over the past 10 years has yielded an 80% increase in the “average” asset size of the nation’s federally-insured credit unions. The 7.3% increase in assets in 2016 was fueled mainly by loan demand as every type of loan saw year-over-year growth. New autos took the lead with a 16.8% jump over a year ago. The chart below shows industrywide trends from 4th quarter 2015 to 4th quarter 2016.

However, credit unions come in various shapes and sizes. They range from the very smallest, $20,596 asset (that’s thousand) unrated Holy Trinity Baptist FCU, a faith based credit union in Philadelphia with fewer than 100 members, all the way to $80 billion *****Navy FCU in Vienna, VA which has 6.8 million members around the world. Not every size witnessed the same growth patterns.

Ten years ago, 25% of the industry had $3.5 million or less in assets. Today fewer than 14% are that small. (Bauer does not rate CUs with less than $1.5 million in assets; there are currently 412.) Even with this growth,  there are still 1,659 federally-insured credit unions with less than $10 million in assets. While these represent over 28% of the industry in quantity, they represent less than 1% of industry assets, shares and loans.

Conversely, the 501 CUs with assets exceeding $500 million represent less than 10% of CUs by count yet control roughly three-quarters of the industries assets, shares and loans.

That being the case, it is much more telling to look at subsets of credit unions rather than the industry in aggregate. That’s exactly what the chart below does. The turning point for shares and assets seems to be at about $100 million in assets. While the smallest CUs are struggling with profitability and delinquencies, they have a larger capital cushion to buffer the blow(s).

Star-ratings are updated on all banks and credit unions now and can be found at The chart on page 7 compares the percentage of recommended credit unions (rated 5-stars or 4-stars) as well as those rated 2-stars or below from fourth quarter 2016 to year-end 2015. Eighty percent of all reporting credit unions (regardless of federal-insurance) are now recommended by Bauer.

There are also currently 156 Credit Unions on Bauer’s Troubled and Problematic Credit Union Report, up from 142 last quarter but lower than the 167 listed a year ago. This list contains all CUs that are rated 2-Stars or below and/or those that are less than “Adequately Capitalized” by Regulatory Standards. This report is available for $99 ($297 for a 1-year subscription). Simply call 1.800.388.6686 or order online at