WILMINGTON, N.C.-Despite healthy numbers recently reported by NCUA, Glatt Consulting's Credit Union Industry HealthScore, which is designed to measure the performance of the credit union industry, showed a decline in the second quarter of the year.
The consultancy reported that the CU HealthScore dipped from 2.446 in Q1 to 2.402 in Q2, and a similar downward tick comparing Q2 2013 to Q2 2012, "which suggests continued industry challenges in key areas of financial performance," Glatt said in a statement. "Though well removed from the lowest historical score calculated during the latest recession (2.148 in Q1 2009), recent scores-including Q2 2013-nonetheless remain below the industry average score of 2.420."
The consulting firm said its scoring process analyzes eleven different key credit union metrics at individual CUs, then the scores are averaged to determine the overall industry's score.
Glatt said lower scores in efficiency, operating expense, delinquency, asset growth and membership growth drove the dip in the overall industry score from quarter to quarter, but noted that scores for net worth, ROAA, charge offs, deposit relationships and loan relationships showed improvement.
Since some of these changes are influenced by seasonal factors, Glatt said looking at the year-over-year comparisons can be more telling. There, the decline was driven by lower scores for return on assets, efficiency, loan-to-share, asset growth, and membership growth.
"The greatest score decline was for efficiency, which measures the relationship between operating expenses and income," Glatt said in a statement. "Efficiency often fluctuates between positive and negative changes, though given legislative/regulatory decisions impacting non-interest income, tight margins due to the low level of interest rates, and seemingly perpetual increases in operating expenses the 'normal' trend has been continuous negative scores."
