Implications of the Loan-to-Share Ratio for the CU Industry

By Preston Packer |



The loan-to-share ratio can be deceiving. It’s calculated by dividing the total amount of outstanding loans by the total amount of share deposits. While this ratio serves as a good indication of a credit unions liquidity, it also shows the level of risk a credit union is willing to take on. Generally speaking, credit unions with a high loan to share ratio are taking on more risk to increase their profits. At the end of Q2 this year, the national loan-to-share ratio reached an all-time high since 2008. On December 31, 2008, it was 83.2% but continued to decline from that point on until it bottomed out in 2013. Since then, the loan-to-share ration has been climbing, and 10 years later it’s finally back up to 82.9% as of June 30, 2018. While things are looking up for the nation as a whole, the loan-to-share ratios actually differ by state, with a few standouts:

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