This week, CreditUnions.com takes a deep dive into the credit union bottom line. We profile two credit unions: one finds cost savings in sustainability, while the other finds income in dollar roles. In addition, Callahan analysts drill into efficiency, revenue, and compensation data.
Here are five data points you need to know:
For the past decade Suncoast Credit Union has made a large investment in solar and sustainability.
Since 2008, when the credit union launched its green initiatives, Suncoast has fitted 13 buildings with solar panels. Four of the 13 buildings are now net-zero compliant, meaning they generate enough power on-site through solar panels and other renewable sources that they require no additional electricity.
Today, Suncoast saves more than $300,000 annually on energy costs, but its green investments do more than save money. Learn more in "How This Credit Union Saves $300,000 Every Year."
The average efficiency ratio for the credit union industry as of March 31, 2017, was 73.3%. That's a slight improvement over one year ago, when it was 74.6%.
To put this in context of what it’s measuring, on average, credit unions spent approxinately $0.73 to earn $1 of revenue.
To see which credit unions are leading the way, check out "Leaders In Efficiency At First Quarter 2017."
As members turn to credit unions to serve as a primary financial institution, member relationships deepen and revenue opportunities expand. In fact, total revenue, which has been on a positive trajectory since 2014, reached $61.8 billion as of March 31, according to data by Callahan & Associates for 99.1% of industry assets.
To see the different ways credit union's generate income to stay competitive in a narrowing margin environment, check out "What Drives Credit Union Revenue?"
A dollar roll is a form of financing in which an investor sells a mortgage-backed security (MBS) on one date and buys it back at a previously agreed upon lower price.
The credit union gets the benefit of the lower price ? known as the “drop” ? when it buys the securities back, while the broker in the meantime gets to use the securities for its own purposes.
Along with the drop, the buyer invests proceeds from the monthly sale with either the Fed or into an investment repurchase transaction, typically called an investment repo. Ent CFO MJ Coon says she expects a 1% yield on the Fed investment but adds Ent could earn a few more basis points by investing those proceeds in an investment repo. See how this strategy works for the credit union in "Dollar Rolls Liven Up Investments At Ent Credit Union."
Credit union expenses, specifically employee salaries and benefits, as a share of total revenue have increased over the past 10 years.
In the first quarter of 2007, employee compensation at credit unions accounted for 24.2% of total revenue, according to data from Callahan & Associates. Fast forward to first quarter 2017, and employee compensation accounted for 33.9% of total revenue.
Learn more in "How Much Do Credit Unions Spend In Compensation."