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Home » Serving struggling rural areas
Leadership Subscribers

Serving struggling rural areas

As more jobs move to urban areas, opportunities in rural areas decline.

November 18, 2019
Mike Schenk
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Mike Schenk
CUNA Chief Economist Mike Schenk

Strong financials

Rural credit unions stand ready to continue to serve in the future. Collectively, they reflect strong financials with healthy earnings and solid capital positions—proving it’s possible to do well while doing good.

Return on assets (net income as a percent of average assets) came in at an annualized 0.83% during the first half of 2019 and has averaged 0.71% since 2013.

Net worth as a percent of total assets finished mid-year 2019 at 12.1%, up from 11.5% at the end of 2013.

Credit unions alone can’t solve the problems rural Americans face. But the record is clear: Credit unions are engaged and committed to these communities, providing substantial capital infusions and significant financial benefits.

Rural America increasingly recognizes and embraces credit unions—and the credit union difference.

Branch location matters

In addition to examining credit unions chartered in rural areas, CUNA economists looked at credit union branching trends. That’s important because many credit unions headquartered in urban or suburban areas operate branches in rural areas.

Preliminary results of this work reveals that branch location matters, especially for nonwealthy consumers. Importantly, compared with for-profit banks, credit unions locate a higher percentage of their branches in lower-income and modest means areas.

Banks locate a higher percentage of their branches in higher-income areas.

Those findings hold for both urban and rural areas. Credit unions clearly are doing their part to reduce obstacles to financial inclusion across the country.

CUNA economists continue to look at branching and study branching trends over time. These trends may show that banks are closing branches in challenged areas while credit unions reflect a continued commitment.

Federal Deposit Insurance Corp. data shows that banks have closed more than 11,000 branches since the Great Recession. According to the National Community Reinvestment Coalition, they’ve created nearly 90 banking deserts in the process.

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