Monday, January 4, 2010

Beer Summit, Part 2

In a comment to my December 14, 2009 post on nonmember business loans, Robbie Wright wrote:

“Your statement to the reporter is a little misleading, insofar as the "non-members" are members of the originating institution. By selecting large CU's, their participation numbers will obviously be large, but it effectively gets your alarmist point across. I'd bet you a beer that their %'s are inline with the industry.”

So, I decided to run the numbers looking at nonmember business loans as a percent of total assets.

I used data from the third quarter for federally-insured credit unions. I excluded any credit union from the analysis that did not report holding a nonmember business loans. If I included all credit unions this would have lowered the average and median and I want to be as fair as possible.

As of September 30, 2009, 713 credit unions reported outstanding nonmember business loans.

The average ratio of nonmember business loans as a percent of total assets was 2.76 percent with a median of 1.50 percent. Seventy-five percent of credit unions held less than 3.66 percent of assets in nonmember business loans.

Below is the ratio of nonmember business loans to total assets for the 10 credit unions holding the most nonmember business loans.

Patelco (CA), 10.27%
Premier America CU (CA), 13.64%
Western FCU (CA), 7.98%
Schoolsfirst (CA), 1.75%
America First (UT), 2.48%
Langley (VA), 7.14%
California Coast (CA), 5.95%
Keypoint (CA), 12.52%
Royal CU (WI), 9.43%
Travis (CA), 5.93%

Eight of these 10 credit unions are in the top 25 percent of credit unions holding nonmember business loans as a percent of total assets.

This would suggest that their holdings of nonmember business loans are not representative of credit unions holding nonmember business loans or the industry as a whole.

So, when we have our beer summit, I’ll have a Yuengling.

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