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
This week, CreditUnions.com looks at the NCUA’s corporate recoveries, mortgage market share, and lessons in leadership.
Here are four data points you can’t miss:
$1,003,029,479
Last week the NCUA, reversing five years of FOIA denials, detailed its payments of more than $1 billion to the attorneys who secured $4.3 billion in settlements from a lineup of Wall Street and international big banks that sold the corporate credit union system the kind of sometimes questionable securities that helped spark the housing crisis and Great Recession.
The NCUA said the attorneys worked on a contingency arrangement of 25% of recoveries. In this case, that s roughly the equivalent of 250 attorneys each being paid $400 an hour for 2,000 hours a year for the past five years.
Even with that, questions as to the future allocation of the NCUA’s recoveries remain. To learn more, read Chip Filson’s latest NCUA Shows Nobody The Money, Except For The Attorneys .
4.2%
During the second quarter of 2016, the median credit union loan portfolio expanded 4.2% year-over-year. Performers in the top 20th percentile posted 12.5% growth. Credit unions in the bottom 20th percentile posted negative growth of -3.8%.
Check out how else the credit union loan portfolio fard in the first six months of 2016 in Lending By The Numbers .
2006
In late 2006, Jen Hogan was working as a radio station manager and ad sales rep in Lewiston-Auburn, ME when a local newspaper interviewed her for a monthly feature on young professionals. When asked about career goals in an interview, she responded marketing director.
Two months later, she heard from Community Credit Union about a job opening for a marketing and training coordinator. She got the job and later that year was named Young Professional of the Year. In 2012, Hogan became an executive vice president, adding deposits, loans, and collections to her areas of responsibility. In October 2015, she took the reins as president and CEO.
In Jennifer Hogan On Leadership , the CEO offers her view on adaptability, tough conversations, and industry needs.
6.1% and 9.4%
Based on new Home Mortgage Disclosure Act data, credit union mortgage origination market share has grown faster than the performance seen by banks.
By dollar amount, the credit union origination market share of 6.1% represents a 34.0% increase year-over-year. By number, credit union market share of 9.4% represents 22.4% growth. Banks posted 26.0% and 13.7% year-over-year growth in these same metrics, respectively.
To learn more from the new HMDA data, check out U.S. Mortgages: Credit Unions Vs. Banks .
Happy Reading!
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.
CREDIT UNION EFFICIENCY
FOR U.S. CREDIT UNIONS $50 MILLION IN ASSETS | DATA AS OF 09.30.16
Callahan Associates |www.creditunions.com
| Credit Union | State | Assets | Efficiency Ratio (Excluding PLL) |
Operating Expense /Average Assets |
ROA | |
|---|---|---|---|---|---|---|
| 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.