Benchmarking is key to measuring your credit union’s performance. Without this, a credit union would not know where they stand in comparison to their peers. A credit union could compare themselves to others within their town, county, state, or those in their asset range nationwide. One may also wish to compare themselves to the performance of other financial institutions, such as banks or thrifts.
Benchmarking is often focused on financial performance, but perhaps just as important is market share. Answering questions such as which institutions are gaining market share? Is our market share rising or falling? How well have we penetrated the markets in which we compete? These will allow you to identify opportunities in your market and focus resources appropriately.
Deposit Share Benchmarking
Deposit share benchmarking is an area many credit unions look to measure. With the strongest fourth quarter share growth in three years at 1.3%, credit unions are improving but still challenged to grow deposits. In order to fully evaluate performance, credit unions must see how other financial institutions in their market and beyond are growing deposits.
For banks, retail deposits grew 6.6% in 2006 based on an examination of FDIC data. The first level of benchmarking analysis would tell us that banks are growing their deposits at a faster rate than credit unions. What kind of market share do credit unions have nationwide, or even at the state level if banks continue to grow deposits faster than credit unions?
As of December 31, 2006, credit unions held 8.6% of all deposits nationwide. This has decreased from 9.0% as of June 30, 2005 according to the Summary of Deposits Survey released annually by the FDIC. This compare to the 29.4% of the population that credit union members represent.
Based on this report, we can also break deposit market share down to the state level. The top three states in credit union deposit market share were Alaska (35.1%), Oregon (19.3%), and Hawaii (18.4%). These top three states account for 3.3% of credit union shares nationwide. Credit unions in these states play a very important role in the lives of local residents. Are there lessons to be learned from what these credit unions are doing? The data is a starting point for that analysis.
With knowledge of the performance of other financial institutions and the market as a whole, your credit union is better able to benchmark your performance and react accordingly. To learn more about market share benchmarking and how credit unions are using it, join us for Benchmarking Market Share: The Why and How, a webinar brought to you by Callahan & Associates, Inc.