Analysis Suggests CU Industry's Overall Health Declined During Q3
WILMINGTON, N.C.-The health of credit unions declined during the third quarter, according to one company's analysis.
The "Credit Union Industry HealthScore" created and monitored by Glatt Consulting, shows the overall "health" of CUs declined to 2.329 in Q3, down 2.01% from Q2 and a -6.76% change from Q3 2009. The industry's highest score over the last 10 years, 3.321, came in Q1 2001, Glatt Consulting said. Until this quarter's HealthScore calculation, the lowest industry HealthScore over the last 10 years was Q1 2009's score of 2.366.
The HealthScore is a composite score reflecting overall industry health and is based on a 5-point scale, with 5 being the most healthy and 0 being the least healthy. The score components include earnings, capital, growth, member relationship, liquidity, asset quality, and efficiency.
According to Glatt Consulting, there are 655 credit unions in the top 10%, meaning a composite score equal to or greater than 3.364. The number of credit unions in the top 10% of the score distribution shrunk by 50 over Q2.
The company reported that the earnings component within the score continues to be a major contributor to the low industry HealthScore. In addition, both the expense and efficiency component scores suffered declines over Q2.
In its analysis, Glatt Consulting said, "It seems that many credit unions have repositioned member growth strategies as low priorities in favor of a focus on earnings, asset management, and net worth concerns (perhaps at the urging of regulatory authorities). However, member growth strategy should not be overlooked as a pathway to future industry health and stability."