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Factors Contributing to Credit Union Asset Growth, 1979-2016

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.

Enter your charter number or credit union name to generate your report:


This customized report will help you:

  • Compare asset growth rates with like-sized credit unions
  • Compare interest rate advantage relative to banks
  • Compare marketing investment as percentage of assets
  • Visualize how marketing investment impacts asset growth

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

Categorized: 'Products & Services' 'Strategy'

Tagged: 'asset growth' 'credit union strategy' 'key performance indicators'

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Comments on this Report

Thank you for your insightful question!

CU performance in general, and growth in particular, is always the result of a myriad factors with complex interactions. Both (1) high deposit rates and (2) high loan-to-deposit ratios are statistically strongly linked with CU asset growth. There are, in turn, complex links between loan-to-deposit ratios and deposit rates (see pp. 77-78 of the report). Higher loans-to-deposits are one among other factors that help make it possible for the CU to earn more interest income and to pay better rates on deposits. However, higher loans-to-deposits per se are not the single driver of deposit rates and/or asset growth. Looking at loans-to-deposits alone only goes so far. Some CUs with high loans-to-deposits may be investing in low-rate loans, and have poor interest income. Some CUs with lower loans-to-deposits may be investing in high-rate loans or on relatively high rate securities, and may have decent interest income. Alternatively, these CUs may be relying on noninterest income for revenues, or may have particularly low noninterest expenses, still being able to pay high rates on deposits, even if they have lowish loans-to-deposits.

Thus, while high loans-to-deposits are an important factor, they are not the key factor underlying (hiding behind) high deposit rates. The two are separate factors. Besides, a CU with high loans-to-deposits that does not pay high deposit rates is unlikely to grow quickly. Thus, high loans-to-deposits help having high deposit rates, but likely it is the high deposit rates themselves that matter more for asset growth. Again, high loans-to-deposits alone likely do not accomplish much. It is possible (even if harder) to have high deposit rates (and asset growth) even with lowish loans-to-deposits.

All that said, in general, most CUs will typically have either of (1) all of: high loans-to-deposits, high deposit rates, and high asset growth, or (2) all of: low loans-to-deposits, low deposit rates, and low asset growth. However, a careful analysis of the complex interactions leads us to conclude that high deposit rates are not simply a stand-in for high loans-per-deposits.

Thank you for the analysis.  The 3 key drivers of asset growth make sense and are of value to CU leaders.  My follow-up comment is I’m not sure paying higher deposit rates is possible on a sustained basis unless a CU has a higher loan-to-deposit ratio because that provides a higher asset yield.  So, isn’t a higher loan-to-deposit ratio the key driver of being able to offer higher deposit rates?  I’d be curious how the loan-to-deposit ratios rank for the faster growth asset credit unions.

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