Scott Butterfield’ s recent piece landed on something true: the tension between small and large credit unions is real, the myths circulating on both sides are real, and the damage the conflict causes is real. What I want to add is a framework — grounded in data — that explains not just that both sides are wrong about each other, but why they’ve been talking past each other for so long. And more importantly, what alignment actually looks like.
The short version: this isn’t a debate about values. It’s a debate about strategy. And both strategies are working.
The Mission Is the Same. The Math Is Different.
At CUCollaborate, we’ve spent years developing, measuring, and benchmarking a metric called Risk-Based Member Benefit (RBMB). It measures the financial value a credit union delivers to its members relative to what those same members would receive from a bank — accounting for differences in loan rates, deposit rates, and fees, weighted by the risk profile of the membership. In other words, it answers the question a credit union should always be asking: are we actually better for our members than the alternative?
The answer, for the overwhelming majority of credit unions, is yes — by a wide margin. Of the 256 credit unions in our analysis, 98% delivered more financial benefit per member than the average bank. The average credit union delivers over $200 of annual financial benefit per member. The “credit unions are losing their way” narrative isn’t supported by the data.
But here’s where it gets interesting.
Two Axes, One Mission
Think about credit union performance along two dimensions: mission (RBMB) on one axis, and margin (ROA) on the other. A credit union’s ROA tells you whether it’s managing capital responsibly — building the net worth needed to keep serving existing members and serve additional members in the future. Member benefit tells you whether the members are actually better off.
The goal for credit unions, small and large, is the same: produce as much member benefit as possible while maintaining the ROA necessary to sustain growth and extend that benefit to more people. You want to be as far right on member benefit as possible, and as high on ROA as is necessary to build the capital that funds further growth.
The other quadrants are instructive. A credit union with positive member benefit but negative ROA is genuinely serving its members — but not managing its institution responsibly. You can’t sustain member benefit without the capital to back it. A credit union with positive ROA but negative member benefit may be building capital to deploy eventually, but you don’t want to spend long there — that’s the bank’s model, not the credit union’s. Negative member benefit combined with negative ROA represents failure on every dimension simultaneously.
Banks, for their part, want to be in only one place: deeply negative member benefit, as high an ROA as possible. That’s the structural difference between a credit union and a bank — not the charter, not the tax exemption, not the governance structure. The incentive. Credit unions have a structural obligation to be somewhere a bank would never go. Most of them are. The data shows it clearly.
Why the Same Mission Produces Different-Looking Institutions
Here is the part that gets misread as a values conflict when it’s actually a strategic one.
Both small and large credit unions are trying to maximize value for their members. The difference is in how they prioritize two competing goals: maximizing the average financial benefit per member, or maximizing the total financial benefit delivered across the full membership. Well-run small credit unions generally prioritize average benefit; well-run large credit unions generally favor total benefit. Neither priority is wrong. Each reflects a coherent strategic choice about how to pursue the same mission.
The divergence isn’t just about average versus total — it’s about where each type of institution creates value for its members.
Small credit unions — those under $500 million in assets — create member value primarily through lending. Their average loan interest rate differential is 2.05%, compared to 1.82% for large credit unions. That 23-basis-point gap represents a deliberate choice: smaller institutions tend to underwrite manually, extending credit to borrowers with lower credit scores, thinner credit files, lower incomes, and higher proportions of minority borrowers. They accept more risk per loan — and price it lower than the market would — because the relationship with the member is the point. You can’t build a flywheel around manual underwriting, which is why this model doesn’t scale the way a large institution scales. That isn’t a failure. It’s a structural feature of a model that serves people others won’t serve.
Large credit unions create member value through a combination of lending and deposits, with deposit competitiveness as a meaningful differentiator. Their average deposit interest rate differential is 0.81% — nearly double the 0.44% average for smaller institutions. At scale, large credit unions can offer consistently better deposit rates than banks, passing the benefit of their operational efficiency directly to members. The lending relationship may be less bespoke, but the total financial return to the member remains strong.
The result: six of the ten credit unions with the highest average member benefit per member in our dataset are under $500 million in assets — the highest individual performers skew small.
But the top ten credit unions by total member benefit delivered are all above $500 million in assets, with the smallest just over $600 million. Both groups are delivering. They’re just delivering differently.
Neither model has abandoned the mission. Each has made a coherent strategic choice: one optimizing for depth of impact per member, the other for breadth of impact across members. These aren’t competing philosophies. They’re complementary ones. Smaller credit unions serve segments that larger institutions struggle to reach. Larger credit unions extend meaningful benefit to populations that smaller institutions can’t serve at scale. The movement needs both.
What Alignment Actually Looks Like
The conflict Butterfield describes emerges, I’d argue, because each side judges the other by its own success metric. A small credit union leader looks at a large institution’s average member benefit and sees mission drift. A large credit union leader looks at a small institution’s growth rate and sees strategic stagnation. Both are measuring the wrong thing.
Alignment starts with recognizing that both metrics matter — and that different credit unions have legitimate reasons to prioritize one over the other. A credit union serving rural, low-income borrowers with thin credit files should weight average benefit heavily. A credit union with the infrastructure to serve hundreds of thousands of members should weight total benefit heavily. Judging one by the other’s standard produces exactly the toxicity Butterfield is describing.
The shared test is simpler: is the member better off than they would be at a bank? For the vast majority of credit unions — at every asset level — the answer is yes. That is the common ground. That is where the movement actually lives.
If credit union leaders — small and large — started from that shared fact, the debate changes. It becomes less about which model is more authentically cooperative, and more about how the two models can strengthen each other. How can large credit unions share infrastructure, technology, and operational capability with smaller ones? How can smaller credit unions demonstrate underwriting approaches and community relationships that larger ones have lost at scale? How can leagues and advocacy groups support both without the conversation collapsing into a zero-sum argument about whose interests matter more?
Those are the conversations worth having. They’re harder to have if the movement keeps insisting this divide is a values conflict. It isn’t. It’s a strategy debate between institutions that share the most important thing: a structural obligation to prioritize their members over their own profit.
Banks will never have that obligation. Credit unions always will. That’s worth more than any particular asset size. Let’s start acting like it.
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