Leaders In Efficiency For Third Quarter 2016

Credit unions posted a slight improvement in the efficiency ratio versus one year ago. Check out this leader table to see which credit unions beat the industry average.


There are numerous benchmarks to measure how efficiently a credit union manages its operations. Some focus solely on interest income and expenses, while others concentrate on the non-interest side of a business. The efficiency ratio of choice for me examines the relative size of non-interest expenses (commonly known as OpEx) compared to the sum of net interest income, fee income, and other operating income — excluding provision expenses.

By using net interest income in the denominator, we can account for changes in interest rates on both the income and expense side of the business. Additionally, we add in the primary non-interest income components — fee and other operating income — to round out the reach of this benchmark. The result is a metric that provides insight into an institution’s operational income and expense structure.

As of Sept. 30, 2016, the average efficiency ratio for the credit union industry was 73.6%, a slight improvement from a year ago when it stood at 73.9%. With efficiency, the lower the number, the better. Another way to read or interpret 73.6% is to put it in context of what it’s measuring; for example, on average, credit unions spent $0.74 (rounded up) to earn $1 of revenue.

Below is a table of the leaders in efficiency for credit unions with more than $50 million in assets.

© Callahan & Associates | www.creditunions.com

  Credit Union State Assets Efficiency Ratio 
(Excluding PLL)
Operating Expense
/Average Assets
1 Long Beach Firemen’s CA $178,386,667 36.5% 0.58% 1.34%
2 APCO Employees AL $2,737,384,832 37.2% 0.38% 0.80%
3 Employees IA $88,985,474 37.3% 1.10% 2.18%
4 CommunityWide IN $393,267,162 37.3% 1.47% 1.12%
5 Southern TX $92,706,378 37.6% 1.21% 1.30%
6 California Lithuanian CA $113,334,945 40.7% 0.63% 1.18%
7 Dawson Co-op MN $144,381,738 41.6% 1.13% 1.88%
8 Merck Employees NJ $1,974,000,706 42.3% 0.20% 0.39%
9 ACIPCO AL $148,249,923 42.4% 1.21% 2.16%
10 NCPD NY $730,234,623 42.4% 0.55% 0.97%

Source: Peer-to-Peer Analytics by Callahan & Associates.


How Do You Compare?

Want to know where your credit union ranks in terms of efficiency against local and national peers of a similar size? Contact us to find out.

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Nov. 14, 2016


  • I agree your efficiency ratio of choice is my favorite as well. However, I know some of the CU's listed have subsidized overhead and that distorts the value of your top ten. I'd like to see this list comparing same situation credit unions.
    Jim m