WILMINGTON, N.C.–The Credit Union Industry HeathScore, one analysis firm’s composite score measuring the health and performance of U.S.-based credit unions, improved on a year-over-year basis for the 20th straight quarter.
And the state that is surprisingly leading the way: Nevada.
Glatt Consulting Group, Inc. said its HealthScore, calculated using fourth quarter 2018 data, showed a score of 5.862 and represents a 3.2% year-over-year score improvement.
“The continued consolidation of poorly performing credit unions into healthy credit unions, along with overall industry improvements in return on assets, financial efficiency, membership and loan growth, contributed to score gains,” the company said.
According to Glatt Consulting, the Credit Union Industry HealthScore measures overall credit union health, which is calculated by scoring/grading credit union performance across 17 different key ratios. Grading is based on a 10-point scale, with 0 reflecting poor performance and 10 reflecting exceptional performance. The HealthScore has been calculated and published by Glatt Consulting since 2009.
‘Unprecedented Run’
Glatt Consulting said its analysis found credit unions have been on an “unprecedented run of year-over-year performance improvement supported in large part by consistent membership growth coupled with loan growth (scores improved by 5.69% and 7.07% respectively).”
The company added, “Although new industry growth has pressured scores for charge-offs (scores for charge-offs were in decline from 2016 through the first quarter of 2018), charge-off scores seem to have turned a corner, having improved for three straight quarters.”
Glatt Consulting added that one score to note that has been in decline for six straight quarters is the score for cash and short-term investments to assets.
“This ratio is an indicator of the level of cash and liquid assets available to meet share withdrawals or additional loan demand,” the company said. “As loans have grown, and as credit unions have shifted assets from lower yielding short-term investments to loans, this score has gone down. This has generally been beneficial for credit unions, with the tradeoff in lower scores for the ratio being higher scores for return on assets.”
Other Findings
Other findings according to the Credit Union Industry HealthScore:
- The industry’s highest scoring credit union in the fourth quarter, with a score of 8.97, was the $50-million Churchill County Federal Credit Union based in Fallon, Nev.
- Nevada overall boasts the highest average HealthScore of all of the states. The Nevada HealthScore average is 6.81. “The state’s current level of performance is much improved as compared to recession-era data. The state reached a low point in the fourth quarter of 2010 with an average HealthScore of 4.51.”