When I want to get a quick summary of the entire credit union space for things like deposits, I love turning to NCUA call report data. After hearing some of Visible Equity's Client Success team members mention how some of the institutions they work with have slowed down their lending due to insufficient deposit funds, I was curious. I wanted to see what the current credit union deposit environment was like, particularly the change in total deposits for the industry. NCUA call report data are publicly available, remarkably clean data sets, and exceptionally handy in times like these. When looking through the call report data, I decided to focus on just the total shares and deposits (ACCT_018 for anyone looking through the data who is interested). More specifically, I wanted to see the growth between Q1 of 2018 and Q1 of 2019. Has there been a decrease in the overall industry with total shares and deposits?
The first step was to find the percent change between each institution’s Q1 2019 total shares and deposits and its Q1 2018 total shares and deposits. When just applying simple summary statistics on the percent change of total shares and deposits over the year (and removing a few outliers), we find that the average percent change is an increase of 2.10%, or 210 basis points. Of course, this is not a symmetric distribution of percent changes, meaning there are a few institutions pulling that average up higher. Thus, an average may not be quite as representative as we would like. In these situations, the median is typically a more reliable statistic, and for this case the median is an increase of 1.10%, or 110 basis points. Considering the median represents the value at which 50% of the data fall below this point, it’s fair to say that a sizable number of institutions are experiencing declines in their total shares and deposits. In fact, in total about 42% of credit unions have experienced a decline over the past year.
Another thing I love to look at when getting these industry overviews is the breakdown of what is actually happening by states and peer groups. While statistics on the overall industry are saying one thing, digging into state and peer group levels can sometimes reveal deeper insights. Of course many institutions have locations throughout multiple states, so I’m just sticking with the state in which the headquarters are located for an institution, or rather, the state listed in the call report. The peer groups are of course the NCUA defined peer groups found in the table below. Note that the peer group as of the most recent date was chosen as an individual institution’s peer group; this means that any institution that changed its asset size enough to qualify for different peer group designations between Q1 2018 and Q1 2019 was assigned its Q1 2019 peer group. The table also shows each peer group’s median percent change as well as the percent of institutions within a peer group who are experiencing declining total deposits.
Let’s take a look at some distribution plots below. Similar to histograms, the distribution plots are simply showing us the range of values the data take on and their relative likelihoods of occurring. Note that the dotted lines in each of the following plots represent the group median (the same as what’s found in the table above). When looking at the plots below, the top left plot in gray shows the distribution of all percent changes in total shares and deposits for the entire credit union space. This plot shows us that the vast majority of institutions fall between a percent change range of plus or minus 20% with the median being about 1.10%, as previously stated. The rest of the plots show the distributions for each peer group. The big takeaway here is that peer groups one and two show that typically these institutions have declined over the year, whereas groups three and four more closely resemble the population at large, and groups five and six are typically seeing stronger increases. Groups five and six are the ones contributing the most to that overall population median being positive.
Now let’s take a look at the state level. The plot below shows the median percent change by state. The darker the shade of blue, the higher the state median is compared to all other states. If you hover your cursor over a state, you’ll see the state median percent change at the top of the pop-up box followed by the median percent changes for each peer group within the state for added granularity. If we take Wyoming, for example, the state median percent change is 3.68%. If we break things down by peer group within the state, the respective group medians resemble what the overall industry seems to be experiencing; peer groups one and two are negative while the higher groups are positive.
Overall, we see quite the spread of percent changes for all institutions found in the call report. While the median for the entire industry is slightly positive, there exists a large portion of institutions experiencing declines in their deposits, which can affect other areas, such as lending. While some growth can be attributed to mergers/acquisitions, a very small number of institutions at the time of the most recent call report data experienced mergers over the course of the year, and the total deposits for these institutions did not experience massive changes. In all, a significant portion of institutions, though not the majority, have indeed shown negative growth in their total deposits.