VIENNA, Va.—For the first time in world history, a credit union has surpassed $100 billion in assets—and it continues to grow at a record pace.
In the process, Navy Federal Credit Union has also entered the “Too Big To Fail” category, according to one economist.
Navy Federal has for decades been a statistical outlier in the U.S. credit union community, and recent years have only seen it continue to sail far ahead of the rest of the CU fleet. Indeed, Navy FCU’s net income during just the first quarter of this year alone exceeded the individual assets of more than 85% of all U.S credit unions.
As of March 31, Navy FCU reported it now has $103.2 billion in assets, up from the nearly $97 billion in assets reported at year-end 2018.
Founded in January of 1933 as Navy Department Employees Credit Union of the District of Columbia, it changed its name to Navy FCU and opened its FOM to enlisted personnel. In 1962, it became the nation’s largest credit union, a title it has held ever since.
Since 1962, Navy has expanded its FOM to include not just the Navy, but other branches of the military, including the Army, Marines, Air Force, Coast Guard and veterans.
Fast Asset Growth
Along the way, Navy FCU has continued to grow its assets at a pace far in excess of most credit unions. Consider, less than 30 years ago Navy Federal had crested $4 billion in assets.
- June 1990: $4.3 billion.
- December 1999: $11.1 billion
- December 2009: $39 billion
- December 2014: $62 billion
- March 2019: $103 billion
Navy FCU is two-and-a-half-times larger than the second-largest credit union in the U.S., State Employees CU in North Carolina, which reported nearly $39-billion in assets as of year-end 2018.
The Most Important Measure
In a statement to CUToday.info, Navy FCU President and CEO Mary McDuffie said, “For over 85 years, Navy Federal has been committed to serving members who share a common bond: active duty military, veterans, DoD civilian contractors and their families. For us, the most important measure of success is member satisfaction. We strive to do the right thing for each individual member as well as membership as a whole.
We believe our growth has been fueled by good member service. Recognition like Forrester's #1 in Full-Service Banking, Money Magazine's Best Bank for Veterans, and #1 in KPMG's customer experience rankings are the types of benchmarks we measure ourselves against and that will continue to be our focus."
Members appear to agree with McDuffie. The credit union, which uses the tagline “The Members are the Mission,” is not just an outlier in assets, it is also adding new members at a record pace. Navy Federal closed 2018 with more than 8.23 million members, after adding 1.2 million members in 2018, more than 200,000 of whom were veterans and family members, Navy Federal said.
With more than 300 branches, Navy Federal has significant operations in numerous markets around the country, especially those with a large military presence, such as northern Virginia and San Diego. Navy FCU has built and continues to build a large campus in Pensacola, Fla., where by 2026 it expects to have made a $1-billion capital investment in facilities that employee more than 10,000 people with a payroll of more than $425 million.
Navy FCU has built its public profile and become known to many for running a series of television commercials on national TV, including during popular sporting events.
As of Q1, Navy FCU reported:
- $77.3 billion in member deposits and $76 billion in loans outstanding
- Interest income was almost $1.5 billion for the first quarter
- Non-interest income was $413.1 million
- Operating expenses and dividends were $765.9 million and $207.5 million
- Net income for the first quarter of 2019 of approximately $423.6 million
That net income number, from just one quarter, is larger than the individual asset size of 4,848 CUs in the United States, according to Moebs $ervices.
Now Too Big To Fail
Navy FCU has entered some rare territory, not just for credit unions but for financial institutions.
Until the 1st quarter of 2019 there were only 17 financial Institutions with $100 billion or more in assets, pointed out Michael Moebs, economist and CEO at Moebs $ervices.
“These FIs are known as the Too Big to Fail (TBTF) group, as determined by financial regulators,” he said. “It’s a systematic risk collection of FIs in which any one FI could cause considerable financial strain on the entire U.S. economy if it failed. These, formerly, were all banks.”
Number 18 on this list is now Navy Federal.
"Navy Federal is a solid new member of the TBTF," said Moebs. "As a former Navy officer and member of Navy Federal, I have always watched this credit union with amazement. They have 11.75% capital (13.25% with loan loss allowance) and made in 2018 over $1.5 billion or 1.59% return on assets. Their growth continues at an above average pace. And, with only 330 branches and about 17,000 employees, they show up almost all the other banks in the larger-than $100 billion group.”
"The people who run this credit union make every credit union member in the country proud to be part of the credit union movement," added Moebs.
Banks Still Dominate
Still, despite Navy Federal’s asset size, it has a long way to go to catch up with the nation’s largest banks. The largest bank in the country, JPMorgan Chase & Co., had $2.62 trillion in assets as of year-end 2018. Indeed, JPMorgan is larger than the combined assets of all U.S. credit unions. CUNA Mutual’s most recent Trends Report noted the $17.7 trillion held by banks is 12 times greater than the $1.5 trillion held by credit unions.
EDITOR’S NOTE: Moebs $ervices excludes from its count of FIs above $100 billion the following institution types: corporate credit unions, territorial credit unions, “banker’s banks,” industrial banks, trust companies, credit card banks, payment system banks, international banks, investment banks, banks owned by foreign banks, banks with large international deposits, banks owned by private sector companies, such as security firms, insurance companies, etc., and business only financial institutions.