The Benefits of Membership
Customized Analysis of Member Benefits For:
Minnesota
June 2011
Prepared by:
Credit Union National Association
Economics and Statistics Department
Minnesota
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 Minnesota credit unions
provided $114,241,043 in direct financial benefits to the state’s 1,511,055 members during the
twelve months ending June 2011.
(1).
These benefits are equivalent to $76 per member or $144 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 Minnesota 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 Minnesota credit unions.
Consider this:
Financing a $25,000 new automobile for 60 months at a Minnesota credit union will
save members an average $244 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.
Minnesota credit unions excel in providing member benefits on many loan and saving
products. In particular, Minnesota credit unions offer lower average loan rates on the
following accounts: new car loans, used car loans, personal unsecured loans, first
mortgage-fixed rate, first mortgage-adjustable rate, home equity loans, credit cards
loans.
Minnesota 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
14.00
13.19
12.11
11.90
12.00
10.98 11.15
10.76
10.00
8.00
Rates
6.52
6.19
6.00
5.17
4.42 4.57 4.67 4.48
4.31
3.97 3.88 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
0.75
Retirement (IRA) accounts
0.67
0.94
1 Year certificate $10,000 balance
0.84
Type of Savings Product
0.56
Money market accounts
0.50
0.17
Share draft checking, $5,000 balance
0.15
0.21
Regular savings, $1,000 balance
0.20
0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
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
Minnesota
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) 4.42 6.19 -1.77
48-month used car (A paper) 4.31 6.52 -2.21
Unsecured loan (A paper) 10.98 11.90 -0.93
5-year adjustable rate 1st mortgage, 0 pts 3.65 3.97 -0.32
15-year fixed rate 1st mortgage, 0 pts 3.88 3.97 -0.09
30-year fixed rate 1st mortgage, 0 pts 4.57 4.67 -0.10
Home equity / 2nd mtg, 80% LTV 0 pts 4.48 5.17 -0.70
Credit card - classic 11.15 12.11 -0.97
Credit card - gold 10.76 13.19 -2.43
Savings Products
Regular savings, $1,000 balance 0.21 0.20 0.02
Share draft checking, $5,000 balance 0.17 0.15 0.02
Money market accounts 0.56 0.50 0.06
1 Year certificate $10,000 balance 0.94 0.84 0.11
Retirement (IRA) accounts 0.75 0.67 0.08
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
$45,000,000
$41,668,388
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,343,079
$15,000,000
$12,921,302
$10,000,000
$7,170,348
$5,247,868
$5,000,000 $2,956,552
$743,946 $768,599
$0
New car loans Used car loans Personal 5-year adjustable 15-year fixed rate 30-year fixed rate Home equity / Credit cards
unsecured loans rate 1st mortgage 1st mortgage 1st mortgage 2nd mortgage
loans
Types of Loan Products
Estimated Total Savings Dividend Benefit
Credit Unions vs. Banking Institutions
$5,000,000
$4,500,000 $4,389,574
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000 $1,824,439
$1,500,000
$1,120,816
$1,000,000
$493,790
$500,000 $334,943
$0
Regular shares Share draft checking Money market accounts Certificate accounts Retirement (IRA) accounts
Type of Savings Product
Estimated Minnesota Credit Unions Financial Benefits
Mid-Year 2011
Rate Total
Avg. Balance Difference Financial Benefit
at vs. Minnesota to Your
Loans Credit Unions (1) Banks (%) (2) Members
New car loans 730,017,090 -1.77 $12,921,302
Used car loans 1,889,722,823 -2.21 $41,668,388
Personal unsecured loans 319,627,287 -0.93 $2,956,552
5-year adjustable rate 1st mortgage 1,665,989,791 -0.32 $5,247,868
15-year fixed rate 1st mortgage 826,606,246 -0.09 $743,946
30-year fixed rate 1st mortgage 768,599,492 -0.10 $768,599
Home equity / 2nd mortgage loans 2,207,637,215 -0.70 $15,343,079
Credit cards 538,617,716 -0.97 $7,170,348
Interest rebates in period $50,446
Total CU member benefits arising from lower interest rates on loan products: $86,870,529
Savings
Regular shares 3,291,933,063 0.02 $493,790
Share draft checking 1,674,714,620 0.02 $334,943
Money market accounts 3,040,731,557 0.06 $1,824,439
Certificate accounts 4,180,546,297 0.11 $4,389,574
Retirement (IRA) accounts 1,358,564,517 0.08 $1,120,816
Bonus dividends in period $0
Total CU member benefit arising from higher interest rates on saving products: $8,163,561
Fee Income
Total CU member benefit arising from fewer/lower fees: $19,206,952
Total CU member benefit arising from interest rates on loan and savings products and lower fees: $114,241,043
Total CU member benefit / member: $76
Total CU member benefit / member household: $144
Source: Datatrac, NCUA, and CUNA
(1) Average balance as of June 2011 and June 2010, according to the NCUA call report.; (2) Source for rates and fees: Datatrac;
Minnesota
Performance Profile
Demographic Information June 11 June 10
Number of branches 380 388
Total assets ($ mil) 15,977 15,608
Total loans ($ mil) 9,772 9,740
Total surplus funds ($ mil) 5,574 5,256
Total savings ($ mil) 13,972 13,647
Total members (thousands) 1,503 1,521
Growth Rates (Trailing 12 months) *
Total assets 2.4 % 4.3 %
Total loans 0.3 % -1.7 %
Total surplus funds 6.1 % 18.6 %
Total savings 2.4 % 6.4 %
Total members -1.2 % -0.1 %
Earnings - Basis Pts. *
Yield on total assets 432 458
Dividend/interest cost of assets 96 144
Fee & other income 106 101
Operating expense 315 306
Loss Provisions 47 71
Net Income (ROA) after stabilization exp 79 13
Capital adequancy
Net worth / assets 9.9 9.5
Asset quality *
Delinquencies / loans 1.7 2.0
Net chargeoffs / average loans 0.7 1.1
Total borrower-bankruptcies 4,624 5,890
Bankruptcies per 1000 members 3.1 3.9
Asset/Liability Management
Loans / savings 69.9 71.4
Loans / assets 61.2 62.4
Long-term assets / assets 34.9 31.4
Core deposits/shares & borrowings 36.9 34.1
Productivity
Members/potentional members 2.6 4.6
Borrowers/members 55.7 55.8
Members/FTE 386 380
Average shares/members ($) 9,297 8,975
Average loan balances ($) 11,666 11,478
Salary & Benefits/FTE 61,945 59,638
* 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.