While recent economic news underscores the need to remain vigilant in managing expenses and watch for signs of trouble within your membership, credit unions are showing a return to normal, or at least a new normal. The industry spent the last two years trimming the fat, bringing down operating expense and efficiency ratios from their 2008 peaks. (Note: The NCUA’s assessment throws a bit of noise around the core factors in the operating expense ratio which leads to the dramatic peaks seen in operating expense.)
Now, credit unions are starting to loosen up the purse strings in virtually all areas of expense. Especially noteworthy are the increase in investments in marketing and conferences, up 4% and 6% respectively at 1Q 2011. Credit unions are recognizing the need to get back in the market place – both externally to communicate with members and within the industry to network and learn from each other.
What does this mean for credit unions’ operating model? The industry averages presented are just that—averages. A deeper look at the data shows that, size – on average – does help drive a more efficient business model, as the chart below demonstrates.
But it is important to note that within each peer group, there is a wide range of performance.
We’ve calculated these metrics for all asset-based peer groups. Click here to download the PDF.