Measure Twice, Cut Once

This week, CreditUnions.com focuses on the different metrics credit unions can use to measure and benchmark performance, whether looking to manage risk or guide loan growth.

 
 

Benchmarking is a powerful tool for credit unions to measure their performance, especially relative to similar peers. 

This week, CreditUnions.com focuses on the different metrics credit unions can use to measure and benchmark performance, whether looking to manage risk or guide loan growth. 

Risk managers monitor disparate areas of the credit union. For key ratios to follow, start with the measures that correspond to the risk indicators outlined by the NCUA. In "7 Ways To Manage Risk," Callahan analyst Liz Furman provides ratios to make enterprise risk management easier and quantifiable.

In "5 Years Of Credit Union Mergers," Callahan analyst Stephanie Clark shows that the number of credit unions have decreased in five years even as the industry's total assets have grown. But what else, she asks, has happened in the past 60 months?

Employee efficiency and productivity are two components that are vital to the success of credit unions. Well-oiled operations along with motivated, well-trained employees bring about better performance across the organization.

But there are other metrics human resources departments should monitor to identify areas for improvement and ensure the cooperative’s success. Stephanie Clark identifies "7 Metrics To Track HR Success."

Call them chief financial officers. Or senior vice presidents of finance. Or just the head bean counters. These are people who perhaps best understand and rely on benchmarks to gauge the performance of their credit unions relative to the industry.

But they’re not the only ones who can glean valuable information from these metrics. Marketers, lenders, the rest of the C-suite, and every other stakeholder in the back office can learn about how the credit union movement is doing on the balance sheet and beyond.

Some of the easiest metrics for non-accountants to grasp are those that have been capturing industry headlines — record lending levels and asset growth, for example. But continuing tight margins from sustained low interest rates and slowly rising operating expenses make some other benchmarks worth watching.

Callahan's director of industry analysis Sam Taft looks at "4 Benchmarks For All Credit Union Leaders." 

Credit unions built on milestones set in 2015 and achieved all-time highs in loans. The industry's loan balances neared $810 billion as of first quarter 2016. And the 10.9% year-over-year loan growth credit unions posted in the first three months of the year bested the 10.5% they posted at this tine last year.

“This continued momentum occurred despite relatively weak economic growth and spending nationally in the first quarter," says Callahan partner Jay Johnson. "But low unemployment and gas prices coupled with strong consumer sentiment and retail sales seems to set the stage for an even stronger 2016."

To build on that momemtun, every credit union employee must understand the role lending plays in the success of the credit union. Educating them on a few key ratios is a necessary first step.

Lending is the engine that powers credit unions. And in "7 Ratios Every Employee Should Know About Credit Union Lending," Callahan's senior industry analyst Michelle Parker helps credit union employees understand why.

Happy Reading!