Data Trends in Branching
Suzanne McGann, Functional Analyst
Janet Lee, Industry Analyst
Callahan & Associates
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Data Trends in Branching
Suzanne McGann, Functional Analyst
Janet Lee, Industry Analyst
Callahan & Associates
Agenda
• Differences in Reporting Requirements:
Banks vs. Credit Unions
• Trends in Credit Unions and Banks’ Branching
• Trends in Deposits and Market Share
• Let’s Do a Case Study!
• Dive into our new BranchAnalyzer
Differences in Reporting
Requirements:
Banks vs. Credit Unions
How do credit unions and banks report
their branch and deposit data?
Banks
- When: Annually (data as of June; data is available around
September)
- Where: FDIC’s The Summary of Deposits
 The Summary of Deposits (SOD) is an annual survey of branch office
deposits for all FDIC-insured institutions.
- What: Branch and deposit information, including:






Bank name
Branch name
Branch service type
Branch number
Branch address
Deposits by branch
How do credit unions and banks report
their branch and deposit data?
Credit Unions
- When: Quarterly
- Where: NCUA’s Credit Union Branch Information
- What: Branch information, including:
 Credit Union name




Branch name
Branch Type (Branch office/Corporate office)
Main office (Yes/No)
Address and phone number
Trends in Credit Unions
and Banks’ Branching
Future of branches..?
WSJ, March 31,2013
The Financial Brand, February 5, 2014
Gensler
The Buffalo News, June 7 ,2014
Business Insider, October 27, 2015
Banks* are closing branches…
Number of Banks and Bank Branches
Data as of June 30
99,163
100,000
99,550
97,274
98,519
98,193
9,000
97,340
96,339
94,752
95,000
8,000
94,725
93,283
92,043
90,000
7,000
6,000
5,000
85,000
4,000
80,000
3,000
2,000
75,000
1,000
70,000
0
2005
2006
2007
2008
2009
2010
Number of Bank Branches
*Banks include both commercial banks and savings institutions
2011
2012
2013
Number of Banks
2014
2015
The effect of branch closures on local
residents and communities
Inconvenience and
costs
Branch
Closure
Financial exclusion
Limited choice in
accessing finance
Financial institution-free counties
• There are 22 U.S. counties that have neither banks nor credit unions.
State
County
AK
ALEUTIANS EAST
AK
DENALI
AK
HOONAH ANGOON
AK
LAKE AND PENINSULA
AK
WADE HAMPTON
AK
YUKON KOYUKUK
AK
ALPINE
GA
ECHOLS
HI
KALAWAO
MT
PETROLEUM
NV
ESMERALDA
NV
STOREY
ND
SIOUX
ND
SLOPE
SD
BUFFALO
SD
MELLETTE
TX
BORDEN
TX
KENEDY
TX
KING
TX
LOVING
UT
DAGGETT
WI
MENOMINEE
A total of 22 counties
Total Population in the County in 2014
3,360
1,921
2,082
1,631
8,010
5,547
1,116
4,003
89
485
822
3,912
4,422
765
2,077
2,100
652
400
262
86
1,117
4,522
49,381
While the number of CUs is declining, the
number of branches remains stable
Number of CUs and CU Branches
Data as of June 30
22,000
20,172
20,472
20,975
21,187
21,443
21,461
21,451
21,425
20,955
20,935
21,021
10,000
9,000
20,000
8,000
7,000
18,000
6,000
16,000
5,000
4,000
14,000
3,000
2,000
12,000
1,000
10,000
2005
2006
2007
2008
2009
2010
Number of Credit Union Branches
2011
2012
2013
2014
Number of Credit Unions
2015
Top 10 states with the highest number of
credit union branches
Rank
State
Number of CU Branches
as of June 2015
CU Deposit Market Share
as of June 2015
1
Texas
1,664
9.4%
2
California
1,598
10.4%
3
New York
1,060
4.2%
4
Michigan
1,055
18.4%
5
Pennsylvania
1,037
9.3%
6
Florida
996
9.1%
7
Ohio
811
7.2%
8
Illinois
668
5.1%
9
Wisconsin
641
14.7%
10
North Carolina
625
10.9%
10 Year CAGR in number of branches
10 Year CAGR in Number of CU Branches by Asset Size
Data as of June 30 for All Credit Unions that Are Active Today
10 Year
CAGR in #
Branches
CUs Under
$20M
CUs $20M$100M
CUs $100M$250M
CUs $250M$500M
CUs $500M$1B
CUs Over $1B
0.7%
2.0%
2.7%
2.7%
4.0%
4.8%
10 Year CAGR in Number of CU Branches by Asset Size
Data as of June 30 for All Credit Unions that Have Existed
10 Year
CAGR in #
Branches
CUs Under
$20M
CUs $20M$100M
CUs $100M$250M
CUs $250M$500M
CUs $500M$1B
CUs Over $1B
-6.2%
-2.2%
0.0%
1.7%
4.2%
9.5%
Number of credit union branches by asset size
– for all credit unions that are active today
6,000
Number of CU Branches by Asset Size
Data as of June 30
5,000
4,000
3,000
2,000
1,000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CUs Under $20M
CUs $20M-$100M
CUs $100M-$250M
CUs $250M-$500M
CUs $500M-$1B
CUs Over $1B
Trends in Deposits and
Market Share
Share balances close in on $1 trillion as
members direct more savings to credit unions
Historical Share Balances
For all U.S. Credit Unions
$1,200
$999
$922
$823
$800
$735
$611
$600
$503
$403
$400
$307
$201
$200
$103
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
$0
1981
Billions
$1,000
Credit Union Share Balances
as of June 2015
$999,499,756,400
Share growth is on the rise with balances up
$46.9 billion since June 2014
12-Mo. Change and Growth in Outstanding Share Balances
Data as of June 30
$70
$60
7.7%
8%
6.6%
$50
Billions
9%
7%
5.3%
5.4%
4.9%
$40
5%
3.4%
$30
4%
3%
$20
2%
$10
$0
6%
$47.5
$41.3
$61.8
$46.0
$31.1
$46.9
2010
2011
2012
2013
2014
2015
12-Mo. $ Change in Outstanding Share Balances
1%
0%
12-Mo. % Change in Outstanding Share Balances
Loan-to-share ratio is rising at credit unions
Loan-to-Share Ratio
Data as of June 30
90.0%
80.0%
70.0%
76.0%
75.4%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
While change in net liquidity from share growth is
still negative, it improved from a year ago
Billions
Change in Net Liquidity from Share Growth
Data as of June 30
$46.3
$50
$37.4 $39.5
$34.6
$40
$30
$20
$7.5
$10
$8.7
$2.8
$0
-$10
-$20
-$30
-$19.2
-$22.6
-$30.9
-$40
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-$26.9
2015
Since 2007, cost of funds has declined
3.5%
3.11%
Cost of Funds
Data as of June 30
3.0%
2.5%
2.0%
1.5%
1.79%
1.0%
0.5%
0.58%
0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Strong core deposit growth fuels growth in
total shares
YOY Growth by Share Product Type
Data as of June 30
8.7%
7.8%
Regular Shares
Share Drafts
6.8%
3.7%
4.5%
MMA
-1.5%
-1.3%
IRA/Keogh
Share Certs.
8.5%
-0.1%
-2.4%
2Q15
Total Shares
3.4%
-4%
-2%
0%
2%
4%
4.9%
6%
2Q14
8%
10%
The percentage of members with a credit
union checking account is on the rise
Share Draft Penetration
Data as of June 30
60.0%
54.7%
50.0%
40.0%
43.4%
30.0%
20.0%
10.0%
0.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Regular share is the largest component of
credit unions’ share portfolio
Credit Unions’ Share Portfolio as of June 2015
7.7%
13.9%
19.1%
36.4%
22.8%
Share Drafts
Regular Shares & Deposits
Share Certificates
IRA/Keogh Accounts
Money Market Shares
Historical Share Composition
Data as of June 30
$1,000
7.7%
19.1%
$800
11.1%
$600
22.8%
28.4%
$400
18.7%
$200
36.4%
32.8%
$ Share Drafts
$ Regular Shares & Deposits
$ Money Market Shares
$ Share Certificates
$ IRA/KEOGH Accounts
Jun-2015
Mar-2015
Dec-2014
Sep-2014
Jun-2014
Mar-2014
Dec-2013
Sep-2013
Jun-2013
Mar-2013
Dec-2012
Sep-2012
Jun-2012
Mar-2012
Dec-2011
Sep-2011
Jun-2011
Mar-2011
Dec-2010
Sep-2010
Jun-2010
Mar-2010
Dec-2009
Sep-2009
Jun-2009
13.9%
Mar-2009
Dec-2008
Sep-2008
9.0%
$0
Jun-2008
Billions
Core deposits are a becoming a larger part of
credit unions’ share portfolio
Money market deposits make up a half of
banks’ share portfolio
Banks’ Share Portfolio as of June 2015
3.2%
14.2%
15.8%
20.8%
45.9%
Demand Deposits
Other Savings Deposits (excluding MMDAs)
Other
Money Market Deposits
Total Time Deposits
Credit unions’ share growth lags that of
banks
Annual Share Growth
Data as of June 30
9.0%
8.0%
7.0%
5.7%
6.0%
5.2%
4.9%
5.0%
4.0%
3.0%
2.0%
1.5%
1.0%
0.0%
2008
2009
2010
2011
All Credit Unions in U.S.
2012
2013
All Banks in U.S.
2014
2015
Credit union deposit market share has
gradually declined since 2010
Credit Union Deposit Market Share
Data as of June 30
9.5%
9.3%
9.1%
9.1%
9.0%
8.9%
8.9%
9.0%
8.7%
8.6%
8.5%
8.0%
7.5%
7.0%
2008
2009
2010
2011
2012
2013
2014
2015
Top 10 states with the highest credit union
deposit market share
Rank
State
Credit Union Deposit Market
Share as of June 2015
YOY Change in
Deposit Market Share
1
Alaska
29.8%
-0.9%
2
District Of Columbia
24.6%
3.0%
3
Idaho
24.0%
1.6%
4
Washington
22.7%
-0.8%
5
New Mexico
21.6%
0.5%
6
Hawaii
21.5%
-0.5%
7
Oregon
21.4%
-0.1%
8
Vermont
19.6%
-0.8%
9
Michigan
18.4%
0.7%
10
New Hampshire
17.7%
-1.0%
States that reported over 1ppt increase in
credit union deposit market share
1.6 ppts
3.2 ppts
1.7 ppts
ND
1.0 ppt
MN
ID
WI
IA
1.0 ppt
3.0 ppts
Let’s do a case study!
10 states with the highest # of bank branch
closures – opportunities for credit unions?
State
Number of Bank Closures
June 2014 – June 2015
Total Number of Bank
Branches as of June 2015
1
California
325
7,100
2
Texas
320
6,730
3
Florida
306
5,388
4
Pennsylvania
210
4,394
5
Michigan
209
2,743
6
South Carolina
208
1,324
7
Illinois
195
4,628
8
New York
186
5,262
9
Georgia
148
2,482
10
Ohio
143
3,839
Top 10 counties with the highest # of bank
branch closures
County
State
Number of Bank Closures
June 2014 – June 2015
Total Number of Bank
Branches as of June 2015
1
Cook
IL
80
1,518
2
Los Angeles
CA
72
1,792
3
Harris
TX
52
1,002
4
Dallas
TX
42
646
5
Maricopa
AZ
37
845
6
Tarrant
TX
34
451
7
Miami-Dade
FL
31
688
8
New York
NY
30
693
9
Orange
CA
30
683
10
San Diego
CA
29
608
Case Study: Tarrant, TX
• County with the 6th highest number of bank
branch closures (34) over the past year
• Total number of banks: 63
• Total number of bank branches: 451
• Total number of credit unions: 36
• Total number of credit union branches: 81
• Total deposits: $39.5 million
• Total population: 1.9 million
• Unemployment rate: 5.3%
• Credit union deposit market share: 12.1%
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Thank You!
Janet Lee, Industry Analyst
Suzanne McGann, Functional Analyst
202-223-3920
jlee@callahan.com
smcgann@callahan.com