NEW YORK–A new ranking of what one company says is the top 100 credit unions in the country has been released, but it rules out any CU with capital of less than 10% or $1,500 in “net worth per member,” and further suggests that even with NCUSIF insurance, the potential for conservatorship and liquidation are a “terrifying possibility.”
The ranking was compiled and released by Bankdash.
After explaining that one of the “disadvantages” of credit unions is the concept of “field of membership,” Bankdash stated that “in addition to having to sift through thousands of active credit unions in the United States (or the hundreds available in any state or city), consumers have to hope that their efforts result in credit unions that they are eligible to join.
“This was the motivation behind our research effort to compile the list of the 100 best credit unions in America in 2022,” Bankdash stated. “We tried to balance quality and rigor with a diverse enough set of credit unions such that the majority of consumers would be eligible to join at least one of the credit unions on the list. In fact, there are more than a dozen credit unions on this list with eligibility criteria that allows anyone to become a member…”
According to Bankdash, one of the “important selection criteria” it incorporated in arriving at its rankings was stability, stating that while the NCUSIF provides “an important level of protection for customers and their deposits, having a credit union that you are a member of enter conservatorship or face liquidation is a terrifying possibility.”
Certain Requirements
For that reason, it said it only selected credit unions that met these requirements:
- Credit Union Age: At least three years. “We believe newer credit unions are by definition riskier,” Bankdash stated.
- Credit Union Membership: At least 5,000 members. “Members are the lifeblood of every credit union and scale matters in financial services for many reasons including stability. We believe this level of members provides the credit union with necessary critical mass.”
- Net Worth Ratio: At least 10%. This corresponds approximately to the median net worth ratio across all active federally insured credit unions in the United States.
- Net Worth Per Member: At least $1,500. “This corresponds approximately to the average net worth per member across all active federally insured credit unions in the country.”
“Specifically for the last two criteria, we think the net worth of a credit union is one of the most important measures as it is the cumulative value created by the credit union since inception and is net of dividends,” Bankdash stated. “As members have effective ownership of a credit union, this is an important statistic to assess how well a credit union has done its job of creating value for its members. But specifically to the question of stability, we found during our research that in 7 out of the 9 cases of credit unions entering conservatorship or facing liquidation over the past 3 years, the median net worth ratio and net worth per member were both negative. In fact, of the 7 cases the highest net worth ratio was 6.6% and the highest net worth per member was $225. Having a strong net worth position as measured not just by the net worth ratio but on a per member basis, we believe is an important measure of stability.”
Additional Metrics
According to the company, it conducted screening and measurements across seven categories and across more than a dozen metrics.
- Accessibility. Bankdash said it placed a priority on branches, and put less emphasis on online banking and mobile application capability.
- Account Fees.
- Community. “Does the credit union have a track record of giving back to its community?”
- Dividends. “How have members benefited from dividends?”
- Membership Trends. “Does the credit union have critical mass of members and has its membership base been growing over the years?”
- Member Engagement. “How much have members deposited at the credit union?”
- Operational Strength. “How much net worth has the credit union generated over the years, how does that compare per member to other credit unions? How efficiently is the credit union operated relative to other credit unions.
Given that criteria, Bankdash’s full list can be found here.
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