LAKE BLUFF, Ill. — Credit unions in the United States have surpassed a singificant milestone, and now have more than $1 trillion in total assets.
Underscoring the CU community's growing strength, credit unions quietly achieved 19 digits worth of assets sometime in the final two weeks of March, estimated Michael Moebs, economist and CEO of Moebs $ervices. CUNA has also indicated CUs have suprassed $1 trillion.
A Moebs $ervices analysis of the money stock, interim deposit totals at numerous credit unions, and near money-transaction accounts and insured savings-placed CU assets $3.4 billion past the trillion-dollar mark by the end of Q1.
The analysis shows credit unions of all sizes are maintaining the rate of asset growth seen in 2011 and 2010. Credit unions greater than $5 billion increased their assets at a pace of 14% in 2011. Those between $500 million and $5 billion saw an increase of 6.1%. Credit unions with less than $500 million in assets increased by 0.5%. "It was the large credit unions that truly pushed the movement past the trillion-dollar pinnacle," explained Moebs. "The big guys are getting bigger because they have gotten smart, they have reduced expenses, are collecting fee income at a reasonable level, and they know how to price their loans. The smaller guys are not there yet."
The push by big credit unions led to 3% overall CU asset growth in Q1 and 12% annualized, estimated Moebs, making it one of the industry's strongest quarters in the last four years. The excellent quarter led credit unions to top $1 trillion faster that projected. In early January, Credit Union Journal was the first to report the industry would exceed the milestone sometime late in Q2 or early in Q3. Moebs attributed the quick growth in part to the economy beginning to come back.
"You can see that in near money supply, which was flat for close to ten quarters, and then in the third quarter of 2011 it picked up a little (1.5% to 2%)," observed Moebs. "Then in Q4 we saw a 9% increase."
Moebs also gave a great deal of credit to the Fed pumping money into the economy, and, to a smaller extent, growth from consumers coming to CUs as a result of Bank Transfer Day momentum, the fact that people want insured savings accounts instead of money market mutual funds, and tax refund checks. "All of these factors played a role."
In Saugatuck, Mich., Robert Genetski, president of ClassicalPrinciples.com and former chief economist at Harris Bank, agreed with Moebs that the Fed boosting the economy helped CUs hit the historical mark faster than expected. "It would only seem to make sense that when the Fed is pumping more money into the economy that bank loans and investments are going to go up. Some of that increase is going to find its way into credit unions. That would explain what appears to be a much quicker increase in credit union assets this year than anticipated."
However, CUNA chief economist Bill Hampel emphasized the impact of the big membership numbers that followed Bank Transfer Day last year that have continued for the first two months of 2012, with an estimated 700,000 new members recorded for January and February, according to CUNA. The average of 350,000 a month puts the industry on pace for record membership growth for the full year.
Credit unions added approximately 400,000 new members last October through December-one of the best quarters ever for membership growth-and about 850,000 in the final six months of the year, boosting the total to almost 1.3 million new members for 2011.
"Since late last summer we have had much stronger membership growth and it is continuing on into February this year," Hampel told Credit Union Journal. Hampel cautioned the membership figures will probably be recalculated downward, but he still expects big numbers for new memberships.
Looking back, credit unions' historical growth has snowballed dramatically in the U.S., especially in the past few decades. It required almost 50 years for all U.S. credit unions to hit $1 billion in total assets, a mark that was hit in 1950. Credit unions were reporting more than $51 billion by 1980.
It was in the 1990s, however, when credit union asset growth really began its sharp climb, hitting $217 billion in 1990 and more than doubling again to $550-billion as the 20th century came to an end. During the past decade, CUs posted their highest 10-year growth total, adding $391 billion in assets, and closing the third quarter of 2011 at $963.4 billion.
