In the banking industry, the big conundrum is "Too Big to Fail." In the credit union industry, it is "Too Small to Survive."
As of March 30, the smallest credit union in the nation had just under $23,000 in assets. If you convert that to an hourly wage, you're looking at just over $11 an hour. That's right — most of your tellers' annual salaries are probably bigger than the size of America's smallest credit union.
Indeed, 20 credit unions are under the six-figure mark in asset size, with roughly another 300 under $1 million. Add in the nearly 1,500 that are under $10 million and another 2,700 under the $100 million mark, and that gets you to more than 4,500 credit unions that qualify as "small" credit unions — or 74% of the industry as a whole.
When you're talking 74%, that's not a small issue. Even looking at just the CUs that are under $10 million — that still accounts for about one-third of the industry.
And it's a part of the industry that is dying off. The average size of a credit union that ceased to exist — either through actual liquidation or merger — in 2015 was $57.8 million, while the average size of those that survived in 2015 was more than three times that size at $198.4 million.
This same consolidation is playing out — albeit not on the same scale — in mutual banks, as well. Both credit unions and banks point to the same culprit: regulatory burden.
If that is, indeed, the primary problem, is there a legislative or regulatory fix out there? Should there be? Or is this merely the nature of things, and we should just let nature take its course, serenely confident that, no matter a credit union's size, if it is financially strong, remains relevant and is doing a solid job of serving its members, it will survive?
I don't intend these as rhetorical questions, nor am I claiming to have the answers. Rather, I'm asking readers to weigh in on whether there is, indeed, such a thing as "Too Small to Survive." Drop me an email or post a comment on our website. I'll share your insights in a future article.
Because make no mistake: when you're talking about 74% of an industry, it matters.
Editor in Chief Lisa Freeman can be reached at lisa.freeman@sourcemedia.com.
