When evaluating the efficiency of a credit union, the widely-used efficiency
ratio can be a very useful tool. This ratio examines how much of a credit union’s
income is being used to cover the credit union’s expenses. A low value
for this ratio indicates that a credit union is able to both generate income
and minimize expenses. The industry average in the 1st Quarter of 2004 was 72.86%.
This efficiency ratio has been slowly increasing for credit unions over the
past year. At this time last year, the ratio was only 70.87% . During this same
time period, operating expenses grew by 9.45% while total income decreased by
1.14%. The following table shows 25 credit unions who were able to outperform
the industry by keep their expenses in check while also generating income.