A Steamboat Pilot's View On Flow of the Current

It seems that a Mr. Sam Clemons, who was something of a steamboat pilot during the latter half of the 19th century, may have been onto something when he observed that there are three kinds of lies: Lies, Damn Lies and Statistics.

The statistics for credit unions during 2012 look pretty encouraging; "encouraging" being a relative term after the preceding two to three years brought all but pestilence and locusts.

The year-end numbers for 2012 are not yet in, but through the first three quarters it was apparent that "credit unions" had a good year. As an industry. As a community. Overall. But there are multiple s-words at work here. Just as you can't spell "mask" without an "s," that small "s" making credit unions plural is masking a larger story.

For 2012, the industry-wide data shows lending on the rise and strong membership growth. But for many individual CUs the numbers are either a lie, a damn lie or that other s-word. There has been, in recent months, in press releases and media interviews a fair amount of crowing by the trade groups about those positive figures. But, frankly NAFCU, CUNA and its state leagues ought to be, if not worried, at the very least concerned, as behind the numbers we are seeing a divided "community" of Haves and Have Nots.


Looking At The Numbers

Consider this analysis from CUNA Mutual's Trends Report, which is based on data compiled by CUNA.

* While lending is up among "credit unions," not "every credit union is growing loans. Data show 3,325 CUs (47% of all CUs) reported declines in loans outstanding between Q3 2011 and Q3 2012." The top 200 CUs (2.8% of all CUs) as measured by the largest dollar amount of increase, accounted for 84% of that loan growth!

* At $1.03 trillion, industry assets are up 5.8% during the past year. However, CUNA Mutual reminded that 1,730 CUs (25% of all CUs) reported a loss of assets between Q3 2011 and Q3 2012. These CUs held 6.7% of industry assets.

* Here's a really critical point. Much has been made, including in Credit Union Journal, about the tsunami of consumers who have moved at least part of their business to credit unions over the past year, including more than 700,000 in the third quarter of 2012 alone. At the end of Q3, U.S. credit unions were approaching 100 million total members (the latest figures show 96.2 million members). For the first nine months of the year that was up 2.2 million people, which, unlike the aforementioned Mr. Clemons' much-reported death, does not require any exaggeration.


Half Report A Decline

But the CUNA Mutual analysis noted that while the YTD and year-over-year gains are very impressive, those gains are also highly concentrated. Between Q3 2011 and Q3 2012, CUs with assets in excess of $1 billion (195 CUs) accounted for 63.5% of all membership growth. During the same period, 3,485 CUs (that's half of all CUs) reported membership declines.

There is a lot to digest here, some of which may lead to indigestion. Perhaps the most startling figure is related to lending. What's noted above is worth repeating: The largest 200 CUs (less than 3% of all CUs) accounted for almost 84% of total loan growth over the past year. To get more loans, more members are needed, but as the membership trendline also makes clear, Mr. Clemons may need a fourth category: Damn Statistics.

CU numbers, of course, have always been the mother of all bell curves. For instance, the 4,765 CUs with total assets below $50 million (68% of all CUs) hold just 6.5% of industry assets. These 68% of all CUs, however, often only get about 6.5% of the attention. That will need to change in 2013.

During 2012, the loosely organized protest group "Occupy" made much of the "1%" it argues control nearly all the wealth in the U.S. Its San Francisco affiliate is even pursuing a credit union charter. For the most part, credit union executives don't generally fall into the Occupy-member demographic, and even though a younger wave of execs are taking over at many CUs, I won't believe they have anything in common with Occupy members until I see them camping out in tents at credit union meetings.

But that isn't to say there isn't some strong commonality to be found. No credit union should merge because it simply has no other option. "Throw in the towel" should never be a bullet point in the strategic plan.

The "68%" are a majority, not a minority. They deserve more, but also need to do more among themselves to collaborate and drive efficiencies and grow so that they aren't reaching for that towel.


So Whaddaya Think?

Credit Union Journal will be tackling these issues throughout this year. Our first two issues of the year (2013 Forecast on Jan. 7 and this week's Growth Strategies issue) are just the first steps.

What do you think? Why the disparities? Is the data misleading?

It's actually this question that's most important: what can you and the CU community "do?" As that same steamboat pilot also observed, "Action speaks louder than words, but not nearly as often."

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.