Updates to Numbers

We’ve had a great response so far to the Numbers beta and we are already making some additions due to great feedback.

  • All CUSC shared branches are now included in the database (~4000)
  • All COOP ATM’s. Over 28,000 of them.
  • In partnership with REAL Solutions, we’ve added a list of all credit unions with branches in schools.

What does this mean to you? Well, the shared branching data and the ATM data both have latitude and longitude included. You can make nearly any variety of map mash-up that you can think of. iPhone branch locator app? Check. Andriod app? Check. A branded ATM locator app for your CU? A walk in the park.

We’re working on even more data and hope to have every credit union branch location in the US sometime this quarter. In the mean time, we’re also creating some new “views” in the database because nobody knows that fs220.acct_010 is the field that contains the asset size of the credit union. Once we get a few of the views built, it will be much easier for people not intimately familiar with the data to do useful things with it.

As always, keep playing around with Numbers and let us know if you have any ideas or concerns!

Introducing Numbers

Numbers

Welcome to Numbers, CU Innovators call report data solution.

While the NCUA has been providing call report data for many years, it has always been structured in such a way that makes it problematic to use unless you were a database administrator. There are a few others solutions available to the enterprising user, but none give the flexibility required for a custom reporting solution or web application. Wading through the details every quarter to update Excel spreadsheets is monotonous and takes up valuable time. With Numbers, all that is a thing of the past.

Built on a high-availability database architecture, Numbers is readily available online to be integrated into almost any tool you can dream up.

Internal credit union reporting
Peer comparisons
Merger analysis
CUSO market research
Credit union industry trends
Custom web applications

Numbers has been integrated into websites to demonstrate the effectiveness of a product to potential credit union clients. It has been used for peer comparisons and analysis to determine high performing credit unions. It is currently being built upon to create an impact analysis for potential clients of a CUSO. The list goes on and on.

What, do you say, could I use this for? The NCUA call report contains a large amount of data, including the asset size of every federally insured credit union. It has the url of their website, which online banking provider they use, how many employees they have, who the CEO is, and how much fee income they produced in a given quarter. There is so much information, in fact, that we’ve created a searchable data dictionary (PDF) to help you wade through it all.

Numbers has a large variety of uses and is only limited by your imagination. If you have any idea of how you’d like to use Numbers, drop us a line. We’d love to help you out! For more info, visit the Numbers product page.

Unemployment in Credit Unions

In case you’ve been living in a cave, which the credit union industry can be at times, our economy stinks. Just go look at your 401K statement, at least what’s left of it. And this go around, the credit union industry has not been spared. With the massive problems that the credit crunch produced on a national level, it was only a matter of time until the crunch hit corporate credit unions. Impairments and assessments are just some of the four letter words being thrown around by credit union CEO’s, CFO’s, and the occasional CMO. Once these assessments began impacting the bottom line of credit unions, the layoffs were soon to follow.

Credit Union Employees to IncomeIn the graph to the right, the orange line is income and the blue line represents the number of employees in the industry. As you can see, the industry has been experiencing many layoffs. In typical credit union fashion, they tried to hold off on layoffs hoping that this recession would be short lived. After 6 straight months of massive revenue decline (the industry lost $3.2B in the 1st quarter of 2009), the layoffs began coming and have continued well past the turning point of the income crunch. Roughly 3,000 people have been laid off in just over a year.

While these layoffs represented less than 2% of the total credit union workforce, many high quality people have been displaced and flooded the job market with very experienced candidates. With layoffs continuing, finding a job was proving to be incredibly difficult, even for these experienced people. What made this recession different however, was the new tools available to credit unions, laid off employees, and recruiters that hadn’t been available before.

Jason Lindstrom AdJason Lindstrom was the Chief Political Officer for a large credit union in California and was laid off the end of last year. So what is a veteran of the CU political process, with nearly two decades of experience, to do when he’s laid off? Try to put an ad in the CU Times is the correct answer. Together with Matt Davis, they put together a campaign to raise money for Jason to place this ad in the CU Times. Additionally, Jason has been active on Twitter and his blog, all tools that barely existed less than 5 years ago. With all these tools at his disposal, Jason has been able to create quite the conversation around him and his abilities, getting his resume in front of people that normally would not have been exposed to it.

Another great example is Carla Day. She too was laid off from her credit union, but has turn adversity into opportunity. Carla created, to my knowledge, one of the first internet radio talk shows specifically about credit unions called CU Chat Up. She has interviewed probably over 100 people by now and has generated much word of mouth around herself and CU Chat Up. Similar to Jason, Carla is also active on her blog and on Twitter, expanded her audience, and pool of potential employers, even more.

Many tools exist today for the ranks of the unemployed that are providing new opportunities to demonstrate their experience and have their resume, and themselves, seen in front of a very large audience compared to what was possible only 5 years ago. If you find yourself in an un-or-under employed situation, have hope. All recessions eventually have turned around and hopefully this one won’t be different. Use some of these new technology tools to help build your network and your experience. The massive “flight to safety” from the stock market and other investment vehicles has inflated the balance sheets of credit unions. Once these assets age, the income will begin to catch up, thus stabilizing the bottom line and the capital ratio of many credit unions. Once that occurs, credit unions will being to hire again and fill positions that have been allowed to remain vacant through this economy.

Credit Union Employees To Assets

Beer Summit Part 3

Back in December, Keith Leggett posted an article on his blog, Credit Union Watch, about non-member business lending. To summarize the post:

The reporter was shocked that credit unions were funding business loans to nonmembers, as this seems to contradict the raison d’etre for credit unions as membership organizations.

He then stated a few statistics from the call report picking the top 10 CU’s with non-member business loans, otherwise known as participations. In my response, I stated:

By selecting large CU’s, their participation numbers will obviously be large, but it effectively gets your alarmist point across. I’d bet you a beer that their %’s are inline with the industry.

Keith then did some more follow up work about my comment, posted at Beer Summit Part 2. As is common with statistics, they can be sliced and diced so many ways that nearly every point can be made with the same data, as Mark Twain also believes. That being said, Keith is correct. The top ten credit unions in terms of total business participations do have a higher concentration of participations against assets. However, the numbers simply come down to how you want to look at them.

Simplistically, this is simply a sign of a more advanced business lending credit union. These top ten credit unions use participation loans differently then the rest of the industry according to their investment needs. In an effort to compare credit unions based on the similarity of their philosophy on business lending and investments, I took the list of 700 or so credit unions with business participations and further split it out based on those credit unions who have the majority of the business lending in participations. This cut the list in half, to 366 CU’s, and I believe this is a more accurate representation of credit unions using advanced business lending techniques. Advanced, however, does not necessarily mean that the credit union is taking undue risk. On the contrary, CU’s who participate more than they actually lend to their own membership recognize that they don’t have the internal expertise and controls in place to appropriately lend funds to their own members, even when lending internally may give them a higher rate of return.

These are the top ten credit unions of those who do more participations than their own business lending. Of the 366 credit unions I mentioned earlier, 84% of their business lending portfolio comes from participations. Of these top ten below, only four (Patelco, Western, Langley, and Keypoint) are higher than the industry average.

PATELCO
PREMIER AMERICA
WESTERN
SCHOOLSFIRST
LANGLEY
KEYPOINT
TRAVIS
SAFE
BETHPAGE
CITIZENSFIRST

By simply looking at two factors, one can never come to an appropriate assertation on a given situation. Just because a credit union has a lower average age than the rests of the industry doesn’t mean that they are the best at social media or have the coolest technology.  Nor does having more CUSO’s than the average credit union make you riskier just like having few branches doesn’t make you less popular in your market.

Getting back to the point at hand, I believe credit unions should be able to utilize business lending participations with other credit unions as an alternative form of investment.  The creditor is still a credit union member thus overcoming any objections in my book. Additionally, these participations are included in all Risk Based Net Worth calculations so these activities are not putting an undue or hidden stress on the financial strength of the credit union. I would agree with you however, that lending to a real non-member would be beyond the scope of of the Federal Credit Union Act and ancillary regulatory measures and guidance. I understand the stance the ABA and the banks they represent take on this situation as it is coming straight at a major portion of their income. I’m not sure if you lean towards Keynsism or Marxian economics, but I believe the more competition in a given industry, the better the options for the consumers.

So Keith, I owe you a beer. I’ll be in DC for CUNA’s GAC conference the week of February 21st.  If you’re in DC, I’d love to meet you for dinner or drinks one night that week and I’m sure some other folks would love a lively debate.

Members in Nevada and California hit hard by economy

topten-dq

As I was neck deep in NCUA reports this week, I noticed a few interesting things about the state of delinquency in CU’s.

Not too surprising, but the state with the credit unions that have been the hardest hit by this recession has been Nevada.  Nevada credit unions, on average, have a reportable DQ (accounts over 60 days late) of greater than 5%.  For those not great at math, that means if you have a $100M CU, you have $5M in accounts that are currently 2 months or more late.  Utah is on Nevada’s heels.  And surprisingly, at least to me, Delaware is in the top ten states by DQ%.

topten-dqbalCutting the same numbers a different way, California is having a hell of a time with delinquency as well.  Nearly $2B in overdue accounts.  The 20 states in these two top tens are having real estate problems.  Rather their credit union members are.  So what are credit unions to do facing these types of numbers?  California and Nevada both share the same league, the California and Nevada Credit Union Leagues.  Is there an opportunity for the league to help out?

Oh, and don’t get down on CU’s.  Banks have an average DQ rate of 7.03% for the 3rd quarter.

All information was computed using the 3rd quarter 2009 call report.  The raw data can be found here.

ING’s Growth

“Backed up by a locally focused marketing strategy, the company’s approach has been ratified by the market. ING DIRECT’s deposits grew by 39 percent in 2005, 78 percent in 2004, and 74 percent in 2003. Indeed, among a 100-institution peer group, ING DIRECT had the second-highest rate of deposit growth for the five years between 2000 and 2005. ”

Click here for the source article from American Banker/SourceMedia.

The changing times

“My grandma belongs to that credit union” is something I frequently hear. CU’s do a great job of serving their current, aging members. But we are going to have to change our focus very soon to providing services to our younger members. To quote Debbie Matz from the Board of the NCUA:

“Members age 18-24, who are about to enter their prime borrowing years, represent only 5% of adult credit union members. It is unnerving that more than half of all adult credit union members have aged beyond their prime borrowing years and there are very few young members to replace these aging members.”
http://www.ncua.gov/news/press_releases/2005/NR05-0422.htm

CU’s need to change their mindset and starting making decisions for their future. We need not only to get these new members, but have products that fit their needs, a brand that they can associate with, and a way to provide them with greater financial opportunities.