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Credit Union Industry HealthScore Drops to 2.246
The Glatt Consulting Credit Union Industry HealthScore for Q4 2011 decreased from 2.265 to 2.246, a -0.82% change from Q3 2011. The industry’s highest score, 3.195, came in Q3 2001. The lowest industry HealthScore was Q3 2009’s score of 2.148.
Glatt Consulting’s Credit Union Industry HealthScore is a composite performance score reflecting the overall financial health of US-based credit unions. The score range is based on a 5-point scale, with 5 being the most healthy and 0 being the least healthy. The score is comprised of eleven specific measurements of credit union performance.
Driving the quarter-to-quarter HealthScore decline is a substantial change toward the negative in the score for asset growth, and smaller, yet notable declines in the scores for membership growth and delinquency. The decline in score for asset growth is not much of a surprise as many credit unions are still strategically throttling asset growth in an effort to maintain or build critical net worth ratios. The strategy has generally been successful as reflected in continued positive improvements in the score for net worth, but long-term decline in total assets is not a path to sustained health.
Given the recent press regarding membership growth expectations, the decline in the membership growth score is a surprise. Expectations were for a noticeable bump in the score, rather than a decline. What the score illustrates, however, is that while some credit unions experienced notable membership growth, many did not. In fact, underlying data feeding the membership growth score show that more than half of all credit unions experienced negative member growth in Q4. This experience resulted in negative changes in the growth score both compared to the prior quarter and the prior period.
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Tom Glatt, Jr. established Glatt Consulting, LLC in 2006. The firm was created to provide strategy consulting for credit union leaders, and is driven by its mission to improve clients’ financial performance and competitive standing.