Feb 02 2018

Factors Contributing to Credit Union Asset Growth, 1979-2016

In what is sure to be a landmark publication for credit unions, 35 years of NCUA data are leveraged to bring into view key drivers that positively correlate with higher rates of credit union asset growth. As the dynamics for growth vary depending on scale and resources available to credit unions, this research identifies key factors among five separate asset ranges to provide relevance and context for credit unions of all sizes.

In concert with this publication, Filene created a comparative graph generator using NCUA data, where you are invited to generate a report comparing your individual credit union's historical performance in several key areas.

Luis Dopico
Luis Dopico
Report Number 443

Executive Summary

With ever-increasing regulatory and operational costs, and amid an environment that requires scale for an individual institution to compete for market share, growth is imperative for credit union survival. And as credit unions have seen their collective ranks diminish by nearly 30% in the last 10 years, the risk of not growing foreshadows the ruin of many individual credit unions.

But what factors, competitive advantages, and specific investments of limited capital most reliably help credit unions grow? For many institutions, answering this question has been an enduring challenge.

What Is This Research About?

Leveraging data reported by credit unions to the National Credit Union Administration (NCUA) over the past three-and-a-half decades, Filene Economist Luis Dopico has isolated key drivers and factors that are positively correlated with higher rates of asset growth for credit unions. As the dynamics of growth vary based on the resources and scale of credit unions, the research identifies key factors within five separate asset ranges to provide relevance and context for credit unions of all sizes.

The research finds that in addition to higher return on assets (ROA), three key factors most strongly impact asset growth:

  • Paying market-competitive rates on deposit products
  • Investments in marketing
  • Increasing product breadth among a core portfolio of deposit and loan offerings

Perhaps counterintuitively, increasing the number of branch locations, expanding fields of membership, and adding ancillary products were found to be useful in impacting asset growth for only a limited set of credit union asset ranges.

The research concludes with observations and recommendations for how credit unions can most effectively approach asset growth and member service. Size may be important for growth, but it alone is not sufficient unless the benefits of size are passed on to members.

What Are the Credit Union Implications?

Understanding which factors most reliably drive asset growth will help credit union boards and managers make wise decisions around strategy, pricing, and expense allocation. Exploring which factors do not, on average, have reliable impacts may help prevent credit unions from implementing strategic decisions that may prove to be counterproductive to growth.

As credit unions build and execute strategies to support asset growth, they should consider that:

  • Estimated impacts vary somewhat predictably with economic cycles. For example, the impact of higher deposit rates climbs significantly during times of changing interest rates.
  • Some impacts of growth have changed permanently. Adding assets per member, as an example, now trumps simply adding new members to the credit union.
  • What works for smaller credit unions may not impact larger institutions, and vice versa. While adding new branches may spur growth for a smaller credit union, larger shops might be better served by increasing their marketing expenses.We all want our credit unions to be the survivors of a never-ending march toward consolidation.

By understanding what factors lead to growth, credit unions stand a better chance of surviving and thriving.


Filene thanks its sponsors for helping to make this research possible.