The Benefits of Membership
Customized Analysis of Member Benefits For:
Arizona
June 2011
Prepared by:
Credit Union National Association
Economics and Statistics Department
Arizona
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 Arizona credit unions provided
$64,128,424 in direct financial benefits to the state’s 1,498,087 members during the twelve
months ending June 2011.
(1).
These benefits are equivalent to $43 per member or $81 per member household
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 Arizona 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 Arizona credit unions.
Consider this:
Financing a $25,000 new automobile for 60 months at a Arizona credit union will save
members an average $113 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.
Arizona credit unions excel in providing member benefits on many loan and saving products.
In particular, Arizona credit unions offer lower average loan rates on the following accounts:
new car loans, used car loans, personal unsecured loans, first mortgage-adjustable
rate, .
Arizona credit unions also pay members higher average dividends on the following accounts: .
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
15.01
14.00
12.91
12.33
12.00 11.62
11.17
10.30
10.00
Rates
8.00
6.00 5.39 5.50
4.84 4.74 5.04
4.57 4.58 4.74
4.24 4.10
3.97
4.00 3.65
2.00
0.00
60-month new 48-month used Unsecured loan 5-year 15-year fixed 30-year fixed Home equity / Credit card - Credit card -
car (A paper) car (A paper) (A paper) adjustable rate rate 1st rate 1st 2nd mtg, 80% classic gold
1st mortgage, 0 mortgage, 0 pts mortgage, 0 pts LTV 0 pts
pts
Credit Unions Banking Institutions
Recent Comparative Interest Rates for Savings Products
Credit Unions vs. Banking Institutions
0.43
Retirement (IRA) accounts
0.50
0.56
1 Year certificate $10,000 balance
0.64
Type of Savings Product
0.31
Money market accounts
0.36
0.12
Share draft checking, $5,000 balance
0.12
0.15
Regular savings, $1,000 balance
0.15
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70
Rates
Banking Institutions Credit Unions
Selected June 2011 Fees
Credit Unions vs Banking Institutions
$2,500.00
$2,280.00 $2,309.00
$2,000.00
$1,500.00
$1,000.00
$500.00
$25.00 $30.00 $20.00 $35.00
$0.00
Share draft checking, NSF fee Credit cards, late fee Mortgages, closing costs
Credit Unions Banking Institutions
Arizona
Credit Union and Banking Instituion
Mid-Year 2011 Average Interest Rates and Fees
Average Rate at Average Rate Rate Difference
Loan Products Credit Unions (%) at Banks (%) vs. Banks (%)
60-month new car (A paper) 4.57 5.39 -0.82
48-month used car (A paper) 4.58 5.50 -0.92
Unsecured loan (A paper) 11.62 15.01 -3.39
5-year adjustable rate 1st mortgage, 0 pts 3.65 3.97 -0.32
15-year fixed rate 1st mortgage, 0 pts 4.24 4.10 0.14
30-year fixed rate 1st mortgage, 0 pts 4.84 4.74 0.11
Home equity / 2nd mtg, 80% LTV 0 pts 5.04 4.74 0.30
Credit card - classic 12.91 12.33 0.57
Credit card - gold 10.30 11.17 -0.88
Savings Products
Regular savings, $1,000 balance 0.15 0.15 -0.01
Share draft checking, $5,000 balance 0.12 0.12 0.00
Money market accounts 0.31 0.36 -0.06
1 Year certificate $10,000 balance 0.56 0.64 -0.08
Retirement (IRA) accounts 0.43 0.50 -0.07
Fee Income
Share draft checking, NSF fee $25.00 $30.00 -$5.00
Credit cards, late fee $20.00 $35.00 -$15.00
Mortgages, closing costs $2,280.00 $2,309.00 -$29.00
Source: Datatrac
Estimated Total Loan Rate Benefit
Credit Unions vs Banking Institutions
$20,000,000
$15,797,916
$15,000,000
$11,588,338
$10,000,000
$8,757,982
$5,000,000
$2,381,532
$0
New car loans Used car loans Personal 5-year adjustable 15-year fixed rate 30-year fixed rate
-$659,035 -$870,902 Home equity / Credit cards
-$852,060
unsecured loans rate 1st mortgage 1st mortgage 1st mortgage 2nd mortgage
loans
-$5,000,000 -$4,185,052
-$10,000,000
Types of Loan Products
Estimated Total Savings Dividend Benefit
Credit Unions vs. Banking Institutions
$0
$0
Regular shares Share draft checking Money market accounts Certificate accounts Retirement (IRA) accounts
-$135,880
-$500,000
-$649,342
-$1,000,000
-$1,500,000
-$1,527,006
-$2,000,000
-$2,200,306
-$2,500,000
Type of Savings Product
Estimated Arizona Credit Unions Financial Benefits
Mid-Year 2011
Rate Total
Avg. Balance Difference Financial Benefit
at vs. Arizona to Your
Loans Credit Unions (1) Banks (%) (2) Members
New car loans 1,404,646,979 -0.82 $11,588,338
Used car loans 1,717,164,755 -0.92 $15,797,916
Personal unsecured loans 258,347,548 -3.39 $8,757,982
5-year adjustable rate 1st mortgage 756,041,954 -0.32 $2,381,532
15-year fixed rate 1st mortgage 488,173,789 0.14 -$659,035
30-year fixed rate 1st mortgage 829,430,936 0.11 -$870,902
Home equity / 2nd mortgage loans 1,418,661,592 0.30 -$4,185,052
Credit cards 400,969,316 0.57 -$852,060
Interest rebates in period $3
Total CU member benefits arising from lower interest rates on loan products: $31,958,722
Savings
Regular shares 2,717,590,944 -0.01 -$135,880
Share draft checking 1,235,792,348 0.00 $0
Money market accounts 4,000,556,491 -0.06 -$2,200,306
Certificate accounts 1,908,757,264 -0.08 -$1,527,006
Retirement (IRA) accounts 961,987,689 -0.07 -$649,342
Bonus dividends in period $0
Total CU member benefit arising from higher interest rates on saving products: -$4,512,533
Fee Income
Total CU member benefit arising from fewer/lower fees: $36,682,235
Total CU member benefit arising from interest rates on loan and savings products and lower fees: $64,128,424
Total CU member benefit / member: $43
Total CU member benefit / member household: $81
Source: Datatrac, NCUA, and CUNA
(1) Average balance as of June 2011 and June 2010, according to the NCUA call report.; (2) Source for rates and fees: Datatrac;
Arizona
Performance Profile
Demographic Information June 11 June 10
Number of branches 280 293
Total assets ($ mil) 11,910 12,402
Total loans ($ mil) 7,016 8,149
Total surplus funds ($ mil) 4,492 3,878
Total savings ($ mil) 10,768 11,139
Total members (thousands) 1,441 1,555
Growth Rates (Trailing 12 months) *
Total assets -4.0 % -5.2 %
Total loans -13.9 % -11.8 %
Total surplus funds 15.8 % 13.5 %
Total savings -3.3 % -4.1 %
Total members -7.4 % -1.3 %
Earnings - Basis Pts. *
Yield on total assets 445 501
Dividend/interest cost of assets 48 80
Fee & other income 216 208
Operating expense 411 385
Loss Provisions 118 226
Net Income (ROA) after stabilization exp 84 -6
Capital adequancy
Net worth / assets 8.1 7.8
Asset quality *
Delinquencies / loans 4.1 5.2
Net chargeoffs / average loans 3.4 3.7
Total borrower-bankruptcies 7,642 11,364
Bankruptcies per 1000 members 5.3 7.3
Asset/Liability Management
Loans / savings 65.2 73.2
Loans / assets 58.9 65.7
Long-term assets / assets 35.0 33.1
Core deposits/shares & borrowings 37.1 34.9
Productivity
Members/potentional members 4.3 4.3
Borrowers/members 45.3 46.1
Members/FTE 355 367
Average shares/members ($) 7,472 7,162
Average loan balances ($) 10,741 11,362
Salary & Benefits/FTE 58,356 58,423
* Earnings, net chargeoffs, and bankruptcies are year-to-date numbers annualized. Due to significant seasonal variation, balance sheet growth
rates are for the trailing 12 months.