NCUA reported that smaller federally insured credit unions lagged behind their larger brethren in almost all performance metrics.
For example,
- Credit unions with at least $500 million in assets had a 76 basis point advantage with regard to operating expenses as percent of average assets compared to credit unions with under $10 million in assets. In fact, credit unions with $500 million or more in assets had a cost advantage of 70 and 76 basis points over credit unions with between $10 million and $100 million in assets and credit unions with $100 million to $500 million in assets.
- The 494 credit unions with $500 or more in assets had a 79 basis point advantage with regard to return on average assets versus credit unions with less than $10 million in assets.
Further evidence of the lagging performance of small credit unions is that nearly two-thirds of the decline in the number of credit unions occurred in credit unions with less than $10 million in assets.
I see a trend. A trend in decline. The largest credit unions continue to grow. It is called economic cannibalism. The large are eating the young & the NCUA is at a total and complete loss to stop it. The actual number of credit unions are in a continuing state of decline.
ReplyDeleteMargins started eroding in banks and credit unions 15 years before DoddFrank.
DeleteThe increased compliance is overkill but below $3-500M assets it's over. No matter the rate environment.
Look at the real reasons. Service demands of members and compliance requirements from the government. Hard to keep those expenses reasonable in a low net interest rate environment.
ReplyDeleteI agree with you. it does not bode well for small CUs.
DeleteHow many CUs under $10 million in assets will be around by 2020?
Not many. Just the one or two day a week CUs run by volunteers.
DeleteReal question in same timeframe. How many CUs under $100 million will still be around?