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Industry Performance (3Q 2015)
Industry Performance By The Numbers (4Q 2016)
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Industry Performance By The Numbers (4Q 2015)
How Back-End Cooperation Will Help 6 Credit Unions Cut Compliance Costs By $200K
Building The Six Million Dollar Employee ... On A Budget
Net Interest Margin Stabilizes In 3Q 2013; Net Worth Tops $112.5 Billion
San Antonio FCU Posts A Record Mortgage Performance
Two Roads Crossing
Ready For Rising Interest Rates?
April 14, 2014
Peer Group Comparisons
Return On Assets (ROA)
The member/employee ratio can be hard to use for comparisons. One could argue that a "highly efficient" CU has low member engagement. Many CUs have membership rosters full of $5 savings only members. I think membership growth rate would be an important metric, but again some CUs are in areas of low or negative population growth. Then consider how many CUs aren't interested in growth or earning, but instead are content to simply exist. The best credit unions tend to be those that are growing faster than peer averages, as a reflection of demand for their products and service.
Tony, thanks for the comment. I agree that the member/employee ratio alone might not reflect a true picture for all credit unions that are in different situations (just like a case you mentioned). I believe this is one of the reasons that credit unions should understand the pros & cons of various ratios they are using and know what questions to ask themselves in particular situations. In addition, credit unions have to consider not only their own but also their peers' overall business model, member demographics, strategy when they perform peer group analysis in order to establish an appropriate and meaningful performance benchmark.
As fond as the financial services industry is of peer comparisons, we have to keep in mind that it’s never a one-size-fits-all situation. The credit union’s business model, field of membership, and strategy all shape the interpretation of performance ratios. Importantly, credit unions need to focus on member-denominated metrics to ensure that the majority of those relationships are deep and healthy.
John, thank you for your comment. I completely agree with your opinion. The ratios in this article provide a basic foundation of the benchmarking process, but as you mentioned, all credit unions should take that a step further to understand and take into account a variety of factors that influence and shape the credit unions' performance ratios.
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Industry Performance (3Q 2015)
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