Sign In To Keep Reading!
Need To Register?
Thank you for your interest in reading the fantastic content we have on CreditUnions.com! All users must log in to read, research, browse, and have fun on CreditUnions.com. It's free to create an account.
Learn What You're Missing
Upgrade Your Subscription
Back to CreditUnions.com
Read & Watch
Deposits & Payments
Operations & Technology
Search & Analyze
Find A Credit Union
Find A Credit Union Executive
Build A Peer Group
Strategy & Performance
Anatomy Of A Credit Union
Market Share Guides
Credit Union Directory
How To Earn The Hispanic Credit Union Seal...
How Community 1st Plans To Build Business ...
A Five-Year Plan To Hit $1 Billion In Asse...
Auto Market Share In 3Q 2016
How To Eliminate Fees And Improve The Memb...
A Strategy For ALM Years In The Making
Why Pioneer FCU Tops The Leader Boards
Third Quarter 2016 Shares By The Numbers
How To Cross $10 Billion And Keep On Going
A Strategy To Serve C/D Paper Borrowers
It's Time For Student Loan Refinancing
5 Tips To Survive Multiple Mergers
2014 Credit Union Performance In 7 Charts
The Importance Of Finance In Financial Services
4 Ratios All Staff Members Should Know
3 Takeaways From Trendwatch 4Q 2014
Callahan Bowl XI Predicts Seattle Repeat
Industry Performance (3Q 2015)
Industry Performance (1Q 2016)
Industry Performance By The Numbers (4Q 2015)
Industry Performance By The Numbers (1Q 2015)
12 Ratios For Marketing Managers
Is a High ROA Available Only to Big Credit Unions? Part II
19.2% Loan Growth Drives Navy Federal’s Second Quarter Results
Catch ‘Em Young: Grow Membership and Drive Debit Usage
Debit Card Usage Surpasses Credit Cards in 2006
BECU Posts 19% Share Growth and Rising Membership in 3rd Quarter
Sept. 25, 2006
Good article. It's interesting to think about why some CUs have such high ROAs. I'd be interested to see what kind of programs they are running, and how well their fee/rate structure fits in with the credit union philosophy of returning value to the member.
Being a member of one of the CUs in these results, I have to take exception to being classified as a mid-sized organization. Clearly, some 8,000 CU's were not in this data and I do believe Mid-sized is much closer to 25-50 million in asset size.
Very well written, researched and analyzed! An interesting look at the credit unions size and ROA and their correlation.
It is helpful to read about credit unions that have produced high ROA--the fact that the most extreme results were found in the medium-sized credit unions suggests that there is some uniqueness to their business models. If so, these are important stories to tell at a time when many credit unions are seeking to differentiate themselves strategically from other financial service competitors.
I also agree that you should be including smaller asset size credit unions in your analysis since there are more credit unions under $100 million that over $100 million.
I have to agree with Dan. Could you follow-up with an analysis that includes the majority of CUs?
How many of these ROAs are because of the sale of a building or something extraneous to the core business. If you have adequate capital, what is the point of a high ROA? What are you returning to the member? Each CU should have different plans and goals and attaining those is how they should be rated. One of your examples was -2.00% last year. Is that a good comparison? Just my thots, I could be wrong.
Reasons high ROA is needed: To provide best of market rates for members To enable healthy asset growth To build a service/technology infrastructure To compete with banks (yes, I said banks) To increase market penetration To ensure the long term viability of the co-op. (capital, adequate reserves, etc.)
ROE should be "THE" focus. ROA is only one component of the value returned to members. As a member I have an equity stake and should be properly compensated for that stake with a high return on my capital. It can be given back in the form of even higher dividends, lower fees or improved services via state of the art delivery systems.
The focus you place on high ROAs as a measure of success is misplaced. After all, who is paying for the high ROA? It's the member, of course. We target an ROA that supports our capital and growth requirements - not a penny more. Last year it was 1.10% and in 2007 it will be .75%. So will we be less successful in 2007 than 2006? I think not. Your ROM (Return to the Member) index is a much better measure of value to the member. We rank 14th best among all credit unions and want to improve on that for 2007.
2014 Credit Union Performance In 7 Chart...
Industry Performance (3Q 2015)
Is a High ROA Available Only to Big Cred...
1001 Connecticut Ave. NW Suite 1001
Washington, DC 20036
P: 800-446-7453 F: 800-878-4712
© 2017 Callahan & Associates, Inc.
All rights reserved