The structure and growth of the credit union industry in the United States: meeting challenges in the market

American Journal of Economics and Sociology, The, April, 1994 by Surendra K. Kaushik, Raymond H. Lopez

Figure 2 presents data on total credit union membership, based on the three major types of credit unions. There were almost 65 million credit union members at the end of 1992, i.e. one-fourth of the U.S. population. The credit union industry has almost 21 million more members in 1992 compared with 1980 when there were 44 million members. This is an increase of nearly 48 percent in twelve years, or a 3.28 percent compound annual growth rate.

Federally chartered and federally insured credit unions attracted about 13.6 million new members, an increase of 47.8 percent from 1980 to 1992. The state chartered/federally insured group grew by 57.6 percent (from 12.3 million to 21.8 million) over the same period. The state chartered/privately insured category experienced a decline of about 2.2 million members by 1992 compared to 1980.

Table 1

COMPOSITION OF THE CU INDUSTRY WITH PROJECTIONS TO 2000

Year   Federally      State Chartered,   Other State    Total U.S.
       Chartered,     Federally          Chartered,     CUs
       Federally      Insured CUs        Privately
       Insured CU's                      Insured CUs

1980     57.95%           22.87%            19.17%        100.00%
1981     57.59%           24.03%            18.38%        100.00%
1982     58.46%           25.25%            16.30%        100.00%
1983     57.48%           25.74%            16.78%        100.00%
1984     57.40%           25.28%            17.32%        100.00%
1985     57.35%           27.87%            14.78%        100.00%
1986     57.64%           29.15%            13.20%        100.00%
1987     57.77%           30.32%            11.91%        100.00%
1988     58.04%           30.30%            11.66%        100.00%
1989     58.34%           30.10%            11.56%        100.00%
1990     58.50%           29.89%            11.61%        100.00%
1991     58.85%           33.82%             7.33%        100.00%
1992     59.50%           33.25%             7.25%        100.00%
1993     59.24%           33.71%             7.05%        100.00%
1994     58.98%           34.17%             6.85%        100.00%
1995     58.71%           34.63%             6.66%        100.00%
1996     58.43%           35.09%             6.48%        100.00%
1997     58.15%           35.56%             6.29%        100.00%
1998     57.86%           36.02%             6.12%        100.00%
1999     57.56%           36.49%             5.94%        100.00%
2000     57.26%           36.96%             5.77%        100.00%

Note: Above data represent active credit unions
Source: Annual Report, National Credit Union Administration, 1980 - 1992
Credit Union Report, Credit Union National Association, 1980 - 1992

In terms of asset and membership growth, credit unions continue to be among the financial institutions of choice, as options for financial intermediation continue to widen, for a growing segment of the population. Data presented in Figure 2 suggest the importance of federal insurance on individual's savings and investment funds. Within this industry, those institutions that cannot offer this element of safety have found themselves in a steadily deteriorating competitive position. In contrast, those credit unions offering the safety and security of National Credit Union Share Insurance Fund (NCUSIF) coverage on accounts up to $100,000 have prospered in the turbulent financial times of the 1980s. Unless stability returns to the marketplace at levels not seen in decades, these trends can be expected to continue through the 1990s.