Bank of America issued a press release on Jan.18 announcing their fourth quarter
results and record 2004 net income of $14.1 billion. Part of this success was
driven by non-interest income which hit $5.96 billion partially due to “record
card income [and] higher service charges” according to
the release. (Emphasis added).
This stands in stark contrast to how credit unions measure success. It would
be a rare day that a credit union issued a press release touting its success
by charging its members higher fees. That doesn’t mean credit unions are
not in business to make money. It’s what credit unions do with their “profit”
that makes the difference to members. The value proposition of credit union
membership is clear: Their profit is recycled back to the members in the form
of higher savings rates, lower loan rates and better member service.
In contrast, if the industry issued a press release on how we measure success,
it might include the following credit unions that scored in the Top Five of
their respective peer groups in Return of the Member (ROM) (see below for more
information). Callahan's created the ROM Index for credit unions looking to
measure their most important asset – their members' use of the credit
The Return of the Member calculation considers three core credit union functions
of lending, savings and product usage. The ranking system is an index calculation
that takes into account a credit union's performance in comparison with its
asset peer group.
- Return of the Savers measures how well a credit union is
providing deposit services to its members.·
- Return to the Borrowers recognizes that credit unions were
created to provide credit to their members at a reasonable cost.
- Member Service Usage measures how efficiently a credit
union provides and promotes services to its members.