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CDCU growth outpaced CU industry at large--Federation analysis
NEW YORK (2/16/11)--Community development credit unions' (CDCU) growth outpaced the overall credit union industry, according to the National Federation of Community Development Credit Unions' semi-annual analysis of trends among credit unions serving predominantly low-income communities. The report for the period through June 30, 2010, notes three forces shaping the movement in general: unabated recession, redoubled regulatory pressure and regulatory fees charged to credit unions, and positive media coverage urging consumers to "move your money" from large banks to community-based institutions. "Resilience amid stress" best captures the condition of CDCUs, according to Cliff Rosenthal, federation president/CEO and co-author of the study with Cathi Min Kyung Kim, assistant director of community development investments at the federation. Indicators of CDCUs' growth noted in the study:
* CDCU assets rose at an annual rate of 6.38%, compared with overall credit unions' 4.37% increase; * Their loan portfolio rose modestly, at an annual rate of 0.92%, compared with an annualized decline of 2.14% for the overall industry loan portfolio; and * Their collective return on assets (ROA) was 41 basis points, roughly the same as that of all federally insured credit unions.
However, said the federation, economic stress took a toll:
* The typical CDCU was marginally unprofitable with an ROA of -0.07%, due in part to deposit insurance charges of 22 basis points imposed by the National Credit Union Administration; and * Thirteen CDCUs were either merged or liquidated, a higher proportion than the overall credit union industry. Four of these credit unions were merged into other CDCUs, ensuring continued service to low-income communities, said the federation.
"The profile of the CDCU movement began to change dramatically in the first half of the year," Rosenthal said. "The announcement of the Treasury Department's Community Development Capital Initiative (CDCI) brought a major influx of credit unions into the federation's ranks," he added. Collective assets of federation member CDCUs more than doubled to $11.3 billion from $5.25 billion. Combined membership rose by 60% to 1.688 million members from 1.072 million. Credit unions that joined the federation early in the year were excluded from the mid-year trend analysis to ensure consistency of analysis, said the federation. "We expect the picture at year-end 2010 numbers to show major changes reflecting the impact of these additional CDCUs and the investment of $69.9 million in secondary capital from the Treasury Department's CDCI program in September 2010," Rosenthal said. For the complete report, use the resource link.
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