As Fragmented as You Can Get: Credit Union Industry Case Study

October 11th, 2017

As part of our KG Prime market intelligence series, we recently examined and retrieved data from the largest players in the U.S. credit union industry. Specifically, we studied the five largest credit unions and compared their data to the rest of the industry. After doing so, we suggested various takeaways for accounts receivable management (ARM) companies based on company-specific and market-wide data. Broadly speaking, the results of our case study confirm that the industry is incredibly fragmented, reflecting the not-for-profit, regional, and small-business nature of credit unions. Additionally, we observed varying trends from one credit union to another with regard to allowances for bad debt and net charge-offs. Some credit unions’ allowances for bad debt and net charge-offs peaked during the Great Recession before falling off and others’ continued growing. After concluding our credit unions industry case study, we maintain our belief that although this market segment is dwarfed by the financial services industry (i.e., commercial and investment banking institutions), there are significant opportunities available to ARM companies.

As shown by the graph below titled 2016 Credit Union Industry Segmentation, by Assets ($1.29 Trillion), the top five credit unions in the U.S. account for just 12.7% of all assets in the market. We can clearly see that Navy Federal Credit Union is by far the largest credit union, which is consistent regardless of which major metric used to measure size. If we adjust for this and simply remove Navy Federal from the picture, there’s even more drastic fragmentation throughout the market. As we stated in our credit union industry examination on KG Prime, there’s rapid consolidation occurring; however, as we can see through the graphic below, it may take decades before it actually makes a difference in the overall market share of this industry.

To access Kaulkin Ginsberg’s in-depth case study on the credit union industry, which includes ARM-focused examinations of major market players, or the rest of our research on the credit union market, please become a KG Prime member today by requesting a company code or contacting us at hq@kaulkin.com. Through KG Prime, you’ll gain access to a user-friendly and secure website full of in-depth M&A, economic, compliance, and market-related data and analyses tailored specifically to the ARM industry. Basic membership is free for ARM companies or others interested in the ARM industry.

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