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

Declining numbers of credit unions in the associational and occupational categories have been responsible for almost all of the reduction in industry totals. The associational category has also declined in absolute and relative numbers over this period, especially since creation of the multiple group category in 1989. Since the occupational category is responsible for almost three-fourths of all the credit unions nationwide, numbers in this category weigh heavily on the industry totals. Stability in the occupational category was also observed, in relative terms, until 1989, when a sharp decline from almost 78 percent to 73 percent took place. This is almost the exact size of the new multiple group category for that year. It seems as if the occupational category has been the driving force behind diversification of the common bond and we expect this pattern to continue through the remainder of the decade.(12)

Average credit union membership has been growing in each common bond category throughout the 1980's and early 1990's. The associational category has the smallest average membership, at 2,164 in 1992, up 65 percent since 1980 (an average annual growth rate of 4.27%). The occupational category averages 4,825 recently, and has experienced an increase of 112.4 percent since 1980 (an average annual growth rate of 6.48%). In the residential group, growth has been even greater, 180 percent over the last 12 years, to 6,100 at year-end 1992 (an average annual growth rate of 8.96%). Finally, for the multiple group category since 1989, growth has only been 10.5 percent (an average annual growth rate of 3.38%). However, this new group is the largest in average membership. At 10,578 the multiple group is well above the associational category, which is the next largest at 6,100.(13)

Table 5

CUs IN THE U.S. BY COMMON BOND WITH PROJECTIONS TO 2000

Year   Association   Occupation   Multiple   Residential   Total

1980      16.20%       79.50%       NA         4.30%       100.00%
1981      16.10%       79.40%       NA         4.50%       100.00%
1982      16.50%       79.00%       NA         4.60%       100.00%
1983      16.60%       78.80%       NA         4.70%       100.00%
1984      16.60%       78.40%       NA         5.00%       100.00%
1985      15.90%       78.30%       NA         5.80%       100.00%
1986      16.10%       78.00%       NA         5.80%       100.00%
1987      16.20%       77.90%       NA         6.00%       100.00%
1988      16.20%       77.70%       NA         6.10%       100.00%
1989      15.30%       73.00%       5.20%      6.80%       100.00%
1990      15.00%       72.60%       5.70%      6.80%       100.00%
1991      14.60%       73.00%       5.70%      6.70%       100.00%
1992      14.10%       72.80%       6.00%      7.11%       100.00%
1993      13.83%       72.71%       6.16%      7.26%       100.00%
1994      13.57%       72.63%       6.32%      7.41%       100.00%
1995      13.32%       72.54%       6.49%      7.57%       100.00%
1996      13.06%       72.45%       6.66%      7.73%       100.00%
1997      12.82%       72.36%       6.84%      7.89%       100.00%
1998      12.57%       72.28%       7.02%      8.05%       100.00%
1999      12.34%       72.19%       7.21%      8.22%       100.00%
2000      12.10%       72.10%       7.40%      8.40%       100.00%

Projected Compounded Growth Rate:
          -1.89%       -0.12%       2.65%      2.10%

Source: Operating Ratios and Spreads, Credit Union National Association, 1980
- 1992, Year End Edition, Sample Data Series