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Follow on Google News | Glatt Consulting Reports Decline in Credit Union Industry HealthScoreThe Glatt Consulting Credit Union Industry HealthScore declines from 2.446 in the first quarter of 2013 to 2.402 in the second quarter suggesting continued industry challenges in key areas of financial performance.
By: Glatt Consulting Glatt Consulting’s HealthScore scoring process is based on best-practice performance thresholds for eleven different key credit union metrics. Individual credit union performance is analyzed against performance thresholds for each metric, a process which results in metric-specific health scores ranging from 0 to 5 with 5 reflecting exceptional health and 0 reflecting poor health. These scores are then averaged to arrive at an overall health score for the institution. Using these institution- General Performance Trends Quarter-to-quarter score comparisons between Q1 and Q2, 2013 show a 1.76% decline in the overall industry score, driven by lower scores for efficiency, operating expense, delinquency, asset growth, and membership growth. On a positive note, scores for net worth, return on assets, charge off, deposit relationships, and loan relationships showed improvement. Many of the changes quarter-to-quarter, positive and negative, were driven by common seasonal influences impacting asset and membership growth. For example, credit unions commonly purge membership roles of dormant accounts in the fourth quarter, leading to overly positive growth scores in the subsequent first quarter. By the second quarter, the positive trend is reversed as growth ratios fail to keep up with the “inflated” For this reason, period-over- The greatest score decline was for efficiency, which measures the relationship between operating expenses and income. Efficiency often fluctuates between positive and negative changes, though given legislative/ As with the quarter-to-quarter comparison, however, there are positive trends to note. Net worth, delinquency, charge off, and deposit relationship scores have all maintained the trend of period-over- Additional Score Notes and Trends Score Distribution and Ranges Nearly 50% of all credit unions possess scores ranging from 2.0 to 2.9, and more than 77% possess scores equal to or less than 2.29. Only 23% possess scores of 3.0 or greater. The highest health score is 4.727, while the lowest is 0.18. These scores are held by credit unions in Ohio and Illinois, respectively. Peer Group Health Peer group 6, designating the largest credit unions by assets, remains substantially above average in every score category while Peer Group 1, the smallest of credit unions by assets, remains below average in all but the efficiency category. State Health Guam, a US territory, has the highest overall health score of 3.318, followed by New Mexico and North Dakota, which both possess scores over 3.0. The lowest score of 1.582 is held by the US Virgin Islands, also a US territory, followed by Delaware, with a score of 1.993. Questions For questions or discussion, contact Glatt Consulting at (888) 217-5988. Additional HealthScore information can be found at http://glattconsulting.com/ End
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