A Step Toward Quantifying Member Value

We quantify success in achieving the goal of maximizing the value of the credit union to its member/owners by measuring four components: service, value, convenience and organizational durability. The value component is measured by means of a straightforward calculation comparing the cost of credit union products and services with bank competitors in our major markets. We take an average of local banks’ savings product rates, lending product rates and fees. We calculate the difference between these and the rates and fees the credit union charges. We multiply the variance by our volumes. The sum of those calculations is referred to as our Value Transfer to Members. As a cooperatively owned institution, ROA based on net income is only one part of the equation. By calculating the Value Transfer, we are able to accurately demonstrate the true financial value of the credit union to its members. By adding the Value Transfer to net income, the resulting Adjusted ROA can be used to provide a valid comparison to the ROA of for-profit banks.




Jan. 1, 2007



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