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Banks & Credit Unions: Where we’re at in 2019

There are currently 5,594 credit unions (CUs) and 4,805 commercial banks (banks) in the United States. As a point of reference, in 1984 there was 15,497 credit unions and 17,878 banks (including non-members & the now extinct S&L industry). To emphasize the drastic drop-off without requiring you to break out your calculator, that’s a decline of 22,976 or approximately 69% (from 33,375 to 10,399).

Question: What’s the difference between a bank and a credit union?

Answer: Credit Unions do not pay taxes. (yes, there are a few other minor differences but in the modern era, they pretty much do all the same stuff)

The next key to understanding exactly what is happening is to take a look at asset size. Prior to that, let’s just make sure we’re on the same page about what that actually means.

Additionally, I would like to apologize in advance for my use of generalities as I would typically like to depart as far away from the classic Brave New World dystopian “Generalities are intellectually necessary evils” currently propagated by mass media.

Bank/CU assets can be best thought of as loans. Yes, bank’s and CUs have cash and investment securities (some way more risky than you’d believe) on their books, but typically it’s various loan types. Bank/CU liabilities, for those that are interested, can be best thought of as deposits (think checking & savings accounts).

So, back to asset size.

Currently, the asset size of all CUs is $1.46 trillion and US banks is $16.84 trillion. Relativity is key here, so I’ll give you the post-2008 numbers (remember the “great recession”) and the 1984 numbers to stay consistent. Also, if you’re wondering why 1984, good for you being curious, and the answer is that I wanted time frame to approximately represent 1/3rd of a century. So, in 2008, CU assets totaled $813.4 billion and bank assets totaled $12.253 trillion, about $600 million less and $4.5 trillion less, respectively. Take it back to 84', CUs had $113 billion and banks had $2.1 trillion, about $1.3 trillion less and $14.7 trillion less, respectively.

So, armed with the facts, you ask “how did this absurd shift occur over a 34 year period or even a decade?”. Way less banks and CUs, way more assets, something just doesn’t add up. You continue, “there has to be a logical reason: GDP per capita growth, increase in population, better access to these institutions/advent of internet banking, something..?”.

Don’t worry, stay tuned for more articles and join me on the exploration of the quagmire that is modern banking (and credit union-ing, even though they are pretty much the same).

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