I felt a chill go down my spine

Are you scared yet?

Halloween is just around the corner, so I started thinking about which scary novel to read this season. I thought about re-reading “The Shining” by Stephen King, but wasn’t sure I could keep Jack Nicholson’s face from invading my dreams. So I started thinking about even older classics like “Dracula” by Bram Stoker, or Mary Shelley’s 1918 classic of “Frankenstein“… at least until I got distracted by my job.

It was when I started looking through the most recently posted NCUA quarterly report that I felt a chill go down my spine. Because something didn’t look right to me.

No, it wasn’t the number of members added (3.3 million), or the rise in assets ($78.6 billion), or the increase of total loans ($56.1 billion) over the past year. Those numbers looked good.

It was the number of credit unions.

By the second quarter of 2024, there were only 4,533 federally insured credit unions. (Additional research found that private share insurance through ASI may only add about 100 more.)

Those numbers didn’t look right to me. Back when our agency started working with credit unions in the late 1990’s, I remembered being told there were something like 13,000 credit unions.

So what happened?

If you look through NCUA’s timeline you can see the growth, from the first US credit union starting in 1909, building up to 9,905 credit unions by the end of 1960. The sixties were then apparently boom time for CUs, since by 1969, there were 23,866 credit unions in the US.

But those numbers have been dropping ever since, a decline that is apparently consistent with industry consolidation trends that continue year-over-year. In 2023 alone, there were 149 mergers, only a bit lower than the 181 in 2022.

While the number of credit unions have dropped, their mergers have created even bigger credit unions, who are the true beneficiaries of those growth numbers touted in the NCUA quarterly report. Especially if that CU was in the top end of the asset sizes. While membership rose 4.5% for credit unions with at least $10 billion of assets, institutions between $500 million and $1 billion of assets saw membership decline by 7.5%. What about even smaller CUs, you ask? I couldn’t find any stats on them. I can only imagine what their numbers would be. Very scary.

Thankfully, someone is trying to do something.

The CU De Novo Collective Foundation is fighting for the future of credit unions. They have two missions: help smaller CUs survive and thrive (save one) and help new CUs get started (start one).

The goal is to ensure that new credit unions have the tools and guidance needed to succeed from the outset. To do that, the Collective plans to provide start-up grants and seed funding to new credit union charters, ensuring they have the necessary capital to launch and sustain their operations. By partnering with industry experts, they will offer comprehensive support including consulting, mentoring, technical assistance, loaned executives, sample policies and procedures, and initial training programs for boards and executives.

Here at iDiz, the CU De Novo Collective is one of our passion projects; we believe deeply in power and purpose of the credit union movement, and we’ve supported the CU De Novo Collective and its Foundation with a website, a brand, and in many other ways on its journey from idea to action.

But it’s just getting started. And needs your help.

The CU De Novo Collective Foundation is not YET providing grants and seed money to new charters, nor are they yet able to provide comprehensive support. But they are both primary components of the vision. To get there, a Foundation fund has been established and is accepting donations. So, as you’re working on next year’s budget, consider making a donation to help more credit unions get started and succeed.

Why should existing CUs support small and new CUs?

The CU de Novo Collective website explains it best: “Even today, there are many groups of people who are not well-served by financial institutions and fintech. The increasing pace of mergers and consolidation means that the number of credit unions is dwindling fast. Furthermore, we have nearly lost the ability and resources to create new credit unions to respectfully serve many of these unserved and underserved groups.”

“This is a long-term threat to the vibrancy, uniqueness, value, and even the survival of the entire credit union movement. The time is right, and the time is ripe to revitalize the early entrepreneurial spirit of the credit union movement in new ways.”

>>> Stay tuned for the second part of this series next week. <<<

Kent Dicken
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