March 3, 2014


  • A study of the so-called ROM metric reveals a heavily flawed methodology. For example, the higher the COF, the better the ROM, but no consideration is given to product mix. Credit unions with large deposit portions in CDs will be favored over those with heavy checking usage. The same problem exists on the lending side of the metric.
    Tony Hale
  • Tony, thanks for reading and commenting. We always appreciate feedback from our readers. ROM is a model that Callahan developed to try to capture some elements of member engagement with credit unions using call report data. As with any model, it does have its limitations in how it measures things. Speaking to the specific example you mentioned, we have tried to balance this by including other metrics such as number of share accounts per member. We also measure other metrics that indirectly relate to product mix such as share draft penetration. We have tried to balance our measure of Return of the Member between savers, borrowers, and member usage to ensure that a credit union with great scores in one wouldn't necessarily perform well in others.
    Andrew Bolton