Corporate writedowns, NCUSIF stabilization expenses, low interest rates, and other non-operating gains are putting pressure on credit unions' bottom lines. Expense management is now essential to generate positive results. However, rather than slash expenses, which could have a negative impact on members, credit unions are operating more efficiently.
The efficiency ratio quantifies how well a credit union is using its expenses by measuring how much the credit union has to spend in order to generate $1 of revenue. The metric is similar to the operating expense ratio, and a lower value is better. Additionally, the formula's multiple variables provide credit unions with a range of strategic options to influence the ratio’s outcome. For more on the ratio’s definition and to see industry and peer group averages, read How to Examine the Efficiency Ratio.
Leaders in Efficiency Ratio |
Data as of June 30, 2010 | Credit Unions over $20M in Assets |
1 |
SOUTHERN |
TX |
23.23% |
6.25% |
1.22% |
$53,634,598 |
2 |
SM |
KS |
28.19% |
4.48% |
0.74% |
$57,843,421 |
3 |
WORKMEN'S CIRCLE |
GA |
28.59% |
4.87% |
0.87% |
$43,675,483 |
4 |
LUFTHANSA EMPLOYEES |
NY |
29.50% |
3.63% |
0.41% |
$90,921,327 |
5 |
PROGRESSIVE |
NY |
30.69% |
6.46% |
1.41% |
$607,283,782 |
6 |
WHITEFISH |
MT |
30.77% |
4.29% |
0.78% |
$1,191,549,038 |
7 |
STAR ONE |
CA |
32.18% |
3.57% |
0.72% |
$5,240,381,871 |
8 |
AIR LINE PILOTS ASSOCIATION |
IL |
32.35% |
3.22% |
0.50% |
$192,305,724 |
9 |
GLENDALE AREA SCHOOLS |
CA |
32.92% |
3.74% |
0.88% |
$301,349,690 |
10 |
CAPROCK SANTA FE |
TX |
33.20% |
7.06% |
2.10% |
$31,203,225 |
Source: Callahan's 2011 Credit Union Directory |