The Benefits of Membership
Customized Analysis of Member Benefits For:
Alabama
March 2010
Prepared by:
Credit Union National Association Economics and Statistics Department
Alabama The Benefits of Membership Credit unions generally provide financial benefits to members through lower loan rates, high saving rates, and fewer fees than banking institutions. The Credit Union National Association (CUNA) estimates that Alabama credit unions provided $182,636,938 in direct financial benefits to the state’s 1,739,316 members during the twelve months ending March 2010. These benefits are equivalent to $105 per member or $200 per member household (1). Estimated total benefits of credit union membership are calculated by accounting for differences in credit union and bank pricing. Specifically, average credit union savings account yields, loan interest rates and fees are compared to average bank savings account yields, loan interest rates and fees. The interest rate differences are then applied to respective average credit union loan and savings balances. Fee differences are weighted and applied to credit union non-interest income to obtain the total estimated benefits arising from fees. The per-member and per-household benefits delivered by Alabama credit unions are substantial. But, these benefits are averages. Mathematically, that means the total benefits provided are divided across all members (or all member households) - even those who conduct very little financial business with Alabama credit unions. Consider this: Financing a $25,000 new automobile for 60 months at a Alabama credit union will save members an average $333 per year in interest expense compared to what they would pay at a banking institution in the state. Further, loyal members - those who use the credit union extensively - often receive total financial benefits that are much greater than the average. Alabama credit unions excel in providing member benefits on many loan and saving products. In particular, Alabama credit unions offer lower average loan rates on the following accounts: new car loans, used car loans, personal unsecured loans, home equity loans, credit cards loans. Alabama credit unions also pay members higher average dividends on the following accounts: regular savings, share draft checking, money market accounts, certificate accounts, IRAs.
Source: Datatrac, NCUA, and CUNA. (1)Assumes 1.9 credit union members per household.
Recent Comparative Interest Rates for Loan Products Credit Unions vs. Banking Institutions 16.00 14.65
14.00 12.64
12.00
11.10
10.91
9.88
Rates
10.00
10.14
8.21
8.00 6.00
7.43
5.16
5.19 4.57
4.95
4.77
4.74
5.22
5.17 4.42
4.89
4.00 2.00 0.00 60-month new car (A paper)
48-month used car (A paper)
Unsecured loan (A paper)
5-year adjustable rate 1st mortgage, 0 pts
15-year fixed 30-year fixed Home equity / Credit card rate 1st 2nd mtg, 80% classic rate 1st mortgage, 0 mortgage, 0 LTV 0 pts pts pts
Type of Loan Product Credit Unions
Banking Institutions
Credit card gold
Recent Comparative Interest Rates for Credit Unions Saving Products Credit Unions vs. Banking Institutions 1.17 Retirement (IRA) accounts 1.77
1.45 Type of Saving Products
1 Year certificate $10,000 balance 1.93
0.90 Money market accounts 1.61
Share draft checking, $5,000 balance
0.24 0.54
0.34 Regular savings, $1,000 balance 0.84
0.00
0.50
1.00
1.50 Rates
Credit Unions
Banking Institutions
2.00
2.50
Selected First Quarter 2010 Credit Union Fees compared to Banking Institutions $2,500
$2,309.00
$2,280.00
Dollar Amount
$2,000
$1,500
$1,000
$500
$25.00
$20.00
$30.00
$35.00
$0
Alabama Share draft checking, NSF fee
Types of Fee Income Credit cards, late fee
Area Banks Mortgages, closing costs
Alabama Credit Union and Banking Instituion First Quarter 2010 Average Interest Rates and Fees Loan Products 60-month new car (A paper) 48-month used car (A paper) Unsecured loan (A paper) 5-year adjustable rate 1st mortgage, 0 pts 15-year fixed rate 1st mortgage, 0 pts 30-year fixed rate 1st mortgage, 0 pts Home equity / 2nd mtg, 80% LTV 0 pts Credit card - classic Credit card - gold
Average Rate at Credit Unions (%)
Average Rate at Banks (%)
Rate Difference vs. Banks (%)
5.16 5.19 10.91 4.57 4.77 5.22 4.42 11.10 9.88
7.43 8.21 12.64 4.95 4.74 5.17 4.89 14.65 10.14
-2.27 -3.02 -1.73 -0.38 0.03 0.05 -0.48 -3.55 -0.26
0.84 0.54 1.61 1.93 1.77
0.34 0.24 0.90 1.45 1.17
0.51 0.30 0.71 0.48 0.60
$25.00 $20.00 $2,280.00
$30.00 $35.00 $2,309.00
-$5.00 -$15.00 -$29.00
Savings Products Regular savings, $1,000 balance Share draft checking, $5,000 balance Money market accounts 1 Year certificate $10,000 balance Retirement (IRA) accounts
Fee Income Share draft checking, NSF fee Credit cards, late fee Mortgages, closing costs Source: Datatrac
Estimated Credit Union Loan Rate Benefits vs. Banking Institutions $70,000,000
$57,968,798
$60,000,000
$50,000,000
Dollar Amount
$40,000,000
$30,000,000
$27,839,824
$20,000,000
$7,539,549 $11,377,880 $10,000,000
$2,991,879
$4,037,597 $0
New car loans -$10,000,000
Used car loans
Personal unsecured loans
5-year adjustable rate 1st mortgage
15-year fixed 30-year fixed Home equity / Credit cards -$253,427 rate 1st rate 1st 2nd mortgage -$285,381 mortgage mortgage loans
Types of Loan Products
Estimated Credit Union Savings Dividend Benefits vs. Banking Institutions $25,000,000
$21,876,530 $20,000,000
Dollar amount
$17,420,977
$15,000,000
$11,605,409 $10,000,000
$8,602,775
$5,000,000
$3,906,899
$0 Regular shares
Share draft checking
Money market accounts Types of Saving Products
CUNA Economics and Statistics Department
Certificate accounts
Retirement (IRA) accounts
Estimated Alabama Credit Unions Financial Benefits First Quarter 2010
Loans
Avg. Balance at
Rate Difference vs. Alabama
Total Financial Benefit to Your
Credit Unions (1)
Banks (%) (2)
Members
New car loans 1,226,423,948 Used car loans 1,919,496,632 Personal unsecured loans 435,812,057 5-year adjustable rate 1st mortgage 1,062,525,404 15-year fixed rate 1st mortgage 844,756,918 30-year fixed rate 1st mortgage 518,874,301 Home equity / 2nd mortgage loans 629,869,237 Credit cards 417,728,512 Interest rebates in period Total CU member benefits arising from lower interest rates on loan products:
-2.27 -3.02 -1.73 -0.38 0.03 0.05 -0.48 -3.55
$27,839,824 $57,968,798 $7,539,549 $4,037,597 -$253,427 -$285,381 $2,991,879 $11,377,880 $44,416 $111,261,134
0.51 0.30 0.71 0.48 0.60
$21,876,530 $3,906,899 $11,605,409 $17,420,977 $8,602,775
Savings Regular shares Share draft checking Money market accounts Certificate accounts Retirement (IRA) accounts
4,331,986,185 1,324,372,552 1,634,564,665 3,629,370,126 1,445,844,479
Bonus dividends in period Total CU member benefit arising from higher interest rates on saving products:
$0 $63,412,590
Fee Income Total CU member benefit arising from fewer/lower fees:
$34,616,018
Total CU member benefit arising from interest rates on loan and savings products and lower fees:
$209,289,742
Total CU member benefit / member: Total CU member benefit / member household:
Source: Datatrac, NCUA, and CUNA (1) Average balance as of year-end 2007 and year-end 2008, according to the NCUA call report.; (2) Source for rates and fees: Datatrac;
$120 $229
Alabama Performance Profile Demographic Information Number of branches Total assets ($ mil) Total loans ($ mil) Total surplus funds ($ mil) Total savings ($ mil) Total members (thousands)
Mar-10 406 14,893 7,640 6,596 13,061 1,753
Mar-10 427 13,730 7,430 5,723 11,998 1,752
Growth Rates (Year-to-date) Total assets Total loans Total surplus funds Total savings Total members
3.1 -1.2 8.6 3.3 -1.0
Earnings - Basis Pts. Yield on total assets Dividend/interest cost of assets Fee & other income * Operating expense Loss Provisions Net Income (ROA) after stabilization exp *
433 140 144 313 50 68
478 194 157 334 51 56
Capital adequancy Net worth / assets
11.1
11.1
1.3 1.0 18 1.4
1.2 0.9 17 1.4
58.5 51.3 28.9 45.6
61.9 54.1 27.4 44.7
7.7 47.2 405 7,451 9,230 51,727
7.7 47.2 399 6,850 8,993 50,107
Asset quality Delinquencies / loans Net chargeoffs / average loans Total borrower-bankruptcies Bankruptcies per 1000 members Asset/Liability Management Loans / savings Loans / assets Long-term assets / assets Core deposits/shares & borrowings Productivity Members/potentional members Borrowers/members Members/FTE Average shares/members ($) Average loan balances ($) Salary & Benefits/FTE
% % % % %
5.2 0.8 12.4 6.1 1.4
% % % % %