Posts Tagged ‘J.P. Morgan Chase’

The number of Credit Union Membership is fairly well-distributed across the various Asset Group Sizes in terms of percentage. Credit Unions have reached $926 million in total assets as of 2010. Compared to their banking brethren, it pales in comparison.

Bank of America, J.P. Morgan Chase, Wells Fargo, Citigroup, and Goldman Sachs each are larger in asset size than ALL the Credit Unions combined. The top 5 banks now control 50% of the assets in these institutions, and just two years ago it took the top 15 banks to control 50%. Banks have slightly more institutions than credit unions, however the bigger credit unions are garnering a larger % of the asset pie just like the bigger banks.

What is abundantly clear…

  • 82% of the credit unions have an asset size <$100 million.
  • 53% have asset size <$20 million.
  • The big have become too Big to Fail.
  • Both FDIC and NCUSIF funds are basically insolvent, and will have to collect for years the premiums to pay for past failures.
  • These institutions will hasten mergers and failures if we have another financial meltdown.

Credit Union Asset Group Members


While the Credit Union mergers are getting bigger, what is happening to:

  • Asset size of the various Credit Union Groups?
  • Loan size of the various Credit Union Groups?
  • Membership of the various Credit Union Groups?

These are statistics as of the 3rd. Qtr. 2010. Large is considered >$100 Million in Assets. While most would consider this large, banks such as J.P. Morgan Chase, Wells Fargo have asset sizes larger than ALL Credit Unions Combined!

The larger credit unions control 86% of all the assets. Asset growth has been 21.6% since the beginning of 2006, and has slowed quite dramatically with these economic conditions. However you would think that with the bashing of the banks these past few years, that it would have been dramatically higher. Why Not?

Lack of leadership, marketing and branding. Social Media has now entered the arena, only to be embraced by most of the larger credit unions. The smaller credit unions have a great opportunity that they are wasting, and getting further and further behind.

The larger credit unions control 87.75% of all loans granted. Loan growth has been 12.31% since the beginning of 2006 and falling dramatically recently.

The larger credit unions control 78.89% of all membership. Membership has only grown 5.03% since 2006 in total.

What will the next 3-5 years look like for Credit Unions?

< $5 Mil $5-$20 $20-$100 > $100 Mil. Total
Total Assets $3,913 $23,423 $99,758 $792,900 $919,994
% of Total Assets 0.43% 2.55% 10.84% 86.19% 100.00%
Total Loans $1,951 $11,895 $56,361 $507,619 $577,826
% of Total Loans 0.34% 2.06% 9.75% 87.85% 100.00%
Total Members 1,117 4,321 13,988 72,593 92,019
% of Total Members 1.21% 4.70% 15.20% 78.89% 100.00%

A new federal law curbing fees on debit-card transactions could wipe out $9 billion in revenue annually for issuers.

The Durbin Amendment, which is part of the financial-overhaul bill enacted in July is one part of the reform. It calls for the Federal Reserve to determine that rates on debit-card transaction or interchange fees are “reasonable and proportional,” and that they cover the ” actual incremental cost” of the transaction. The Fed still has several months to set new terms. “The Durbin Amendment could significantly impact consumers by increasing the cost of their everyday debit card transactions, limiting their payment choices and impacting industry innovation,”Banks are scrambling to gain back some of the lost revenue from this and prior regulatory changes. Among the new tactics being considered:

  • Emphasizing prepaid cards, which are exempt from the new rules.
  • Adding new fees to existing products.
  • Having minimum balances for checking accounts.
  • Watering down debit card reward programs., estimates that if the Fed cuts interchange fees by half — considered a possible scenario by the industry — debit-card issuers will annually lose $9.1 billion, or $18.35 per debit card, in revenue.U.S. general purpose debit card purchases totaled $1.45 trillion in 2009, up 7.5% from 2008, according to the Nilson Report, which tracks the payment industry. Spending on U.S. Visa- and MasterCard-branded prepaid cards totaled $ 49 billion in 2009, accounting for 3.39% of all debit card purchase volume that year. Bank of America, Wells Fargo &Co. (WFC) and J.P. Morgan Chase & Co. (JPM) are the top U.S. issuers of debit cards. The three accounted for 38% of all debit card purchases in 2009, according to Nilson.

In August, Bank of America introduced its most basic checking account with a monthly fee of $8.95.

  • Customers may avoid this fee if they sign up for paperless statements and use automated teller machines or ATMs, and not bank tellers, for routine transactions such as deposits and withdrawals.
  • Last month, the firm took a $10.4 billion charge in its third quarter because of “limits to be placed on debit interchange fees … which will reduce future revenues.”
  • It is also testing different checking accounts, allowing customers to choose between a monthly maintenance fee or avoid this fee by using a Bank of America-issued debit or credit card or keeping higher account balances or a mortgage with the company.
Starting this month, Citigroup Inc. (C) will charge a monthly fee of $8 for its most basic checking account.
  • Customers can avoid this fee if they use their account at least five times in a month, including to pay bills and withdraw cash from an ATM. Monthly fees for Citigold — its fully loaded checking account with perks, including free paper checks and no annual fee on certain Citi credit and debit rewards cards — will be $30.
  • Customers may avoid this fee if they satisfy certain conditions, such as maintaining a minimum balance of $50,000 across their checking, savings and money market accounts.

Unintended consequences of financial reform always seem to raise the cost of doing business to the consumer, and the banks and credit unions still need to make their profits.

I wonder if the Free Toaster will be offered again for new accounts?

Let me know if you think these financial reforms are a good thing?