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Why Many Small Credit Unions Are Thriving

In Hoel and Kelly’s special report, they challenge the myth that small credit unions cannot thrive. The report concludes that many small credit unions are thriving and identifies six factors that contribute to their success. The conclusions are based on an analysis of 400 thriving credit unions.

  • Robert Hoel Professor Emeritus of Business at Colorado State University
  • William Kelly Center for Credit Union Research at University of Wisconsin-Madison

Executive Summary 

For years many observers have predicted the imminent and inevitable demise of small credit unions. To be sure, the number of credit unions has declined over 50% from its peak of nearly 24,000 in the early 1970’s to 11,400 today, and the majority of those credit unions that have merged or shuttered their doors have had assets of less than $15 million. However, our research shows that a significant portion of small credit unions are not merely surviving, they are thriving. 

To better understand why many small credit unions thrive, we examined growth rates, financial ratios, and product offerings of 1,800 small credit unions from 1995 to the present. All had between $5 million and $10 million at the beginning of 1995. After filtering out some extreme cases, we identified the fastest-growing 400 credit unions (referred to as the “Thriving 400” in this report) and compared them to the 400 slowest-growing credit unions which, in fact, actually shrank during the study period (hence described as the “Shrinking 400”). Where possible, we also compared both groups to data for the entire credit union movement. 

The Thriving 400 credit unions are truly stellar performers. Throughout the study period, they were clearly superior to the Shrinking 400 and the total credit union movement in four key performance areas: asset growth, loan growth, membership growth, and net income to average assets (ROA).

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