Build A Better Branching Scorecard

Desert Schools’ monthly branching scorecard is an example for other credit unions to follow.

The perceived gap between efficiency and productivity on one hand and member needs and values on the other can be difficult to rectify at a credit union. Despite the seemingly divergent nature of these variables, they do occasionally support one another. For example, member needs can force new efficiencies and productivities.

Desert Schools Federal Credit Union (3.8B, Phoenix, AZ) calculates efficiency and productivity on a branch-by-branch basis via a branching scorecard. The three-year-old scorecard provides a quick and dirty look at branch operations and branch manager performance. It also shows how many members each branch is serving, with success designated as higher volume and more member services.

Ultimately, the scorecard motivates the credit union to figure out what a branch is doing right and to change operations or processes when something is wrong.

What It Tracks

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Desert Schools’ Branch Performance Management Report

Unlike traditional balanced scorecards, Desert Schools’ scorecard doesn’t track a branch’s historical deposits and loans. Instead, the report shows the revenue value of the products a branch provided to members in a given month and subtracts the branch’s controllable expenses. This creates a performance metric that is easy to compare across branches.


In terms of revenue, the largest contribution comes from monthly sales, which the credit union must adjust to a monthly figure.

So we sold one more of these products, what’s that going to contribute from a revenue standpoint to our financial statement? asks Michael Foreman, senior vice president of retail sales at the credit union.

Sales revenue represents the incremental value provided to a member, Foreman says. He worked with the finance department and other business line managers to determine the incremental values of each new product provided to members every month. A loan for example, would be a margin, times a loan amount, times the average duration of that loan, minus any incremental expenses.

Additionally, Desert Schools tracks service revenue from teller, ATM, and shared branch transactionswhich can be as little as $1.50 as well as safe deposit income and other revenue. A fee reversal subtracts revenue from the scorecard.


Staffing and occupancy, which branch managers can largely control, contribute the most to expenses. However, there are some variables within those fields that managers have no influence over.

The credit union operates three types of branches: traditional full-service branches, in-line branches which are generally storefront locations in strip malls and grocery store branches, mostly in Walmart stores, Foreman says. It also operates in different markets that incur largely different expenses.

To ensure its internal benchmarks are appropriate, Desert Schools divides its scorecard into three sections according to the type of branch. To smooth out noise from different markets, it handicaps expenses by calculating the average cost per square foot.

If we didn’t level the playing field on occupancy, it would be difficult to filter out that difference from market to market, Foreman says.

The Bottom Line

After determining revenue and expenses, Desert Schools calculates a net branch contribution, efficiency ratio, sales revenue per full-time sales employee (MSRs and branch managers), and service revenue per full-time service employee (tellers and ATMs).

It then uses this information to influence operational and member-facing decisions.

How It’s Used

The credit union grades a branch’s performance metrics against the average performance of all similar branches. For example, it compares the efficiency ratio at its Black Canyon location against the average efficiency ratio at its 14 full-time branch locations

We’re using this scorecard to compare the performance of one branch and one branch manager against another, Foreman says.

Color-coding allows the credit union to identify top performers at a glance. Above-average performance is color-coded green while below-average performance is color-coded red. Within that context, it can determine how well a branch is managed, whether it is appropriately staffed, and whether it needs to change or shuffle employees or other resources.

With metrics such as revenue per full-time service employee, Foreman says the optimal performance from both an efficiency and a member value standpoint is close to the median.

If you are showing too much efficiency, then you probably have long wait lines, he says. If you’re below average, you are probably overstaffed. We want people to come into the branch and not have to wait long to complete their transaction.

One Step Further

Although the scorecard helps the credit union quickly and easily compare branch managers and operational efficiencies, it doesn’t pay much attention to retention, Forman says.

What you see is what is coming through the front door in terms of transactions and new products, he says. It doesn’t give you a reading of what is going out the back door.

For that, the credit union must look at additional reports and data.

In future iterations of the scorecard, Foreman would like to see new or augmented components that consider retention metrics such as active checking accounts, average profitability of membership, and services per household.

There’s a bunch of metrics I would like to add on a branch-by-branch basis to give a more complete picture of how we’re retaining profitable members, he says.

October 13, 2014

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