WILMINGTON, N.C.–The Credit Union Industry HealthScore, a composite score created by one firm to measure the health and performance of U.S. credit unions, has hit an all-time high.
The newest calculations also identify an Arkansas-based CU as the nation’s best performing CU.
According to Glatt Consulting Group, its HealthScore has hit 6.041, a 1.6% year-over-year score improvement. Credit unions performed better in 12 of 17 HealthScore categories, though “potential challenges in the areas of loan and membership growth may be emerging,” the company said.
The Credit Union Industry HealthScore scores/grades 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. Glatt Consulting said it has been calculating the Credit Union Industry HealthScore since 2009.
“In addition to attaining the highest ever HealthScore, credit unions continued their unprecedented run of year-over-year performance improvement,” the company said. “Scores have improved year-over-year for 21 straight quarters, with 12 of 17 of the score components showing positive gains. Notable score drivers include Return on Assets, Efficiency, Delinquencies, Charge-Offs, and Loans to Assets. In addition, credit unions continue to show improvement in Borrowers to Members, which indicates effectiveness in member relationship development and is directly correlated with the improvements in scores referenced above.”
2 Emerging Issues
Glatt Consulting added, however, that while credit unions are managing expenses well relative to current income, “they may have a difficult time maintaining that positive relationship going forward given two emerging score issues: Q1 score declines of 10.37% and 3.20% respectively for loan growth and membership growth. Should score declines for these two components continue over the coming quarters, score declines for income and efficiency may materialize, and the trend of decline in operating expense scores will continue. This will put pressure on the HealthScore overall and could break the streak of year-over-year score improvement.”
Top Performers
According to Glatt Consulting, the highest scoring credit union in the 1st quarter in its calculation, with a score of 9.06, was Little Rock Fire Department FCU in Arkansas. The $13-million CU has approximately 764 members.
“The credit union is a reflection of the strength typical of credit unions serving firefighters. Such credit unions outperformed the industry overall with an average HealthScore of 6.23 vs. the industry score of 6.041,” Glatt Consulting said.
Scoring highest among credit unions of more than $1 billion in assets was Eastman Credit Union in Kingsport, Tenn., with a Q1 score of 8.529. The credit union is also a perennial top performer with a historical average score of 8.03, Glatt Consulting said.
Other high-performing credit unions as ranked by the HealthScore ratings included Churchill County FCU in Nevada, PUD FCU in Washington, Armco CU in Pennsylvania, APL FCU in Maryland, Electrical Workers No. 558 in Alabama, Fresno Grangers in California, Rio Blanco Schools in Colorado, O and R Utilities FCU in New York, and Redwood CU in California.
Overall Trends
Glatt Consulting said 12 of the HealthScore components performed positively, including:
- Net Worth: Up 1.93%
- Solvency Evaluation: Up 2.38%
- Return on Average Assets: Up 9.81%
- Efficiency: Up 5.56%
- Delinquent Loans to Total Loans: Up 3.19%
- Net Charge-Offs to Average Loans: Up 1.23%
- Loans to Assets: Up 6.35%
- Deposits Per Member: Up 1.69%
- Loans Per Member: Up 5.08%
- Borrowers Per Members: Up 2.78%
- Asset Growth: Up 0.77%
Five components that saw decreases include:
- Operating Expenses to Average Assets: Down 3.39%
- Cash and Short-Term Investments to Assets: Down 2.60%
- Regular Shares to Total Shares and Borrowings: Down 1.13%
- Loan Growth: Down 10.37%
- Membership Growth: Down 3.20%