When it comes to determining peer group makeup and performance criteria, it’s advisable to start with clear goals. For example, do credit union leaders want to examine how their shop performs against regional institutions to identify areas of opportunity or market leadership? Are they trying to identify potential merger partners? Do they want to explore a new market for branch expansion?

Identifying clear objectives allows leaders, decision-makers, analysts, and more to focus their efforts, ask better questions, and make stronger data-driven decisions. But if regular performance assessment against industry standards sounds intimidating, it needn’t be. Callahan & Associates’ Peer Suite provides a user-friendly interface with built-in comparison groups and ready-to-use performance reports that make building peer groups a breeze.

The most effective peer groups generally are those based on geography, business model, or aspiration. The peer group makeup and performance can vary greatly depending on which characteristic is in play; regardless, there are several ways to build a better peer group that provides desired insights.  

Determine Geography

Geographic peer groups allow credit unions to measure their performance against local institutions, which can provide a more accurate picture of regional trends. Generally, the specificity of other filtering criteria will determine how specific a geographic peer group needs to be. Geographic territories may be based on a market the credit union currently serves or on a market in which the credit union is interested in expanding — either way is OK.

The geographic filter in Peer Suite allows users to pull comparison institutions in their county, state, or even the entire country. That flexibility is especially useful for narrow performance criteria. For example, if a user wants to build a peer group of credit unions in their state with 5% annual growth in shares, 5% annual growth in members, and assets between $100 million and $200 million, the number of institutions that meet this criteria might not be plentiful enough to yield meaningful insights. In that case, Peer users can simply expand to a regional or even nationwide look.

PRO TIP: Get creative. Credit unions in rural markets might want to exclude the top 20 metro areas. Peer users can easily do that by deselecting the counties in those regions.

PEER SUITE’S GEOGRAPHIC FILTER

Define The Asset Band

When deciding which asset band credit unions should use for comparison benchmarking, they first must understand their ultimate goal. For example, if a credit union leader simply wants to benchmark against similar-sized peers, perhaps a narrow asset band will work best — especially if the middle of the asset band is representative of the credit union’s size. Or, credit unions might be interested in discovering what it will take to expand their asset base. If the credit union is $500 million in assets and leaders have an eye toward growing to $650 million, then the credit union can analyze the practices of credit unions with $600 million to $700 million in assets. Targeting credit unions in a higher asset class is a great way for aspirational leaders to better understand how to achieve their desired growth.

PRO TIP: Callahan advises credit unions to build peer groups of 15 or more institutions; anything below that runs the risk of one credit union skewing the performance of the group at large. If Peer users decide they want to add or subtract institutions to their peer group, they can review their peer group criteria by using the Preview tab below the criteria.

PEER SUITE’S PEER GROUP FILTER

Select Performance Criteria

Selecting performance criteria is an important part of benchmarking. And as with assets and geography, leaders must understand their institution’s goals for benchmarking. Do credit union leaders want to discover other credit unions with a similar business model to assess whether their shop’s earnings match up? Or, do they want to improve their credit union’s performance by using criteria that reflects where they want to be rather than mirroring where they are now? For example, if leaders want to dedicate more than 50% of the credit union’s loan portfolio to total auto without using indirect lending, Peer users can enter the code “(a370+a385)/loans” into the formula bar with a minimum 50% and a maximum value of a618a of $0.

PRO TIP: Performance benchmarking is rarely a one-and-done proposition. As leaders gain insight, they might tweak their formulas to produce more meaningful results. And if they go too far, they can pull back. Peer Suite makes it easy to play around with different levels of criteria to understand where the limits are.

PEER SUITE’S BUSINESS MODEL FILTER

Choose A Field Of Membership

Understanding the field of membership represented in a comparison group is essential in determining whether performance results are meaningful. A credit unions that serves a single, high-earning select employee group, for example, will likely perform quite differently from a credit union that serves all people who live, work, or worship in a low-income county. With this in mind, it is important credit unions select a field of membership that reflects their goals. The field of membership feature in Peer Suite allows users to examine credit unions by charter — state, federal, or both — along with field of membership. Users can also peek behind the curtain to see what performance benchmarking looks like for different fields of membership.

PRO TIP: Only federally chartered credit unions are required to report field of membership to the NCUA, Callahan’s data source for FOM. If credit unions are looking primarily at state-chartered institutions, this might not be an ideal filter for their peer group.

PEER SUITE’S FIELD OF MEMBERSHIP OPTIONS

Peer Suite Puts You In The Driver’s Seat. Define your place in the market and discover new opportunities to serve members. Callahan’s Peer Suite helps credit unions benchmark KPIs against hand-selected peer groups; identify market, merger, and member opportunities; assess strengths and risks; validate strategic decisions; and more. Learn more today.

The post 4 Ways To Build A Better Peer Group In 2025 appeared first on CreditUnions.com.

The big Utah credit union has reduced its cash inventories by 20% and customized its cash needs all the way down to specific denominations in the eight years since it began using the technology.

It’s been part of a strategy that has helped the credit union post better-than-peer results in metrics such as efficiency ratios and return on assets.

Excess cash is essentially a non-earning asset, says Daniel Phillips, senior vice president of finance and controller at Mountain America. There are more effective ways to put it to use throughout the credit union.

ROA
For all U.S. credit unions | Data as of 12.31.15
Callahan & Associates | www.creditunions.com

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

CU QUICK FACTS

MOUNTAIN AMERICA CREDIT UNION
Data as of 12.31.15

• HQ: West Jordan, UT
• ASSETS: $5.1B
• MEMBERS: 565,805
• BRANCHES: 86
• 12-MO SHARE GROWTH: 14.58%
• 12-MO LOAN GROWTH: 20.77%
• ROA: 1.50%

One of Mountain America’s core values is continuous improvement, Phillips says. We wanted to be more efficient and to better manage vault cash.

By using historical data to track cash inventory and forecast needs at each site including adequate denomination counts the credit union has reduced its number of courier deliveries and its individual cash needs by an average of $85,000 per branch.

That’s a lot of cash. Mountain America has just hit the $4 billion mark in deposits at its network of 86 branches in Utah, Nevada, Arizona, Idaho, and New Mexico, according to its Branch Analyzer profile by Callahan & Associates.

Make sense of deposit data for individual branches, institutions, and entire markets. With BranchAnalyzer, the ability to make smart tweaks to your branching strategy is just a click away.Learn more.

Phillips says the credit union’s understanding of cash management has improved at each branch location. Standard order amounts are significantly reduced, and branches are more prepared to meet expected demand.

Centralized ordering also reduced the number of emergency orders, Phillips says. It reduced employee stress and guesswork that accompanied ordering cash prior to implementation.

Watch It On CreditUnions.com

In the Anatomy Of A Dual Market video series, Texas-based Security Service Federal Credit Union talks about cash management, employee security, and member service.

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Mountain America has a solid system in place now, but there have been hiccups in the past eight years.

Upon initial implementation, we encountered some reluctance by branch employees to completely follow the program recommendations, Phillips says. They were concerned that they would not have adequate cash needed for member requests.

Excess cash is essentially a non-earning asset, and there are more effective ways to put it to use.

As those branches began to follow the weekly recommendations, they realized the program not only helped them place their weekly orders, but also provided the guidance needed on specific denominations their members were using and requesting, the SVP continues.

The credit union’s accounting team worked directly with each branch to evaluate needs and address concerns, and trained branch managers on how to use the system via conference calls and manager meetings, Phillips says.

Member service and branch security have both improved, and the credit union and the software have grown more sophisticated since 2008, when Mountain America became the first Symitar core processing client to use the cash management software from Atlanta-based CetoLogic.

Mountain America uses cash management tools from CetoLogic. Find your next partner in Callahan’s online Buyer’s Guide. Browse hundreds of supplier profiles by name, keyword, or service area.

The software now automatically uploads daily denomination cash endings to better track branch, ATM, and vault cash. It uses an internal Access database and interfaces with the Symitar Episys core to communicate to CetoLogic’s own servers the credit unions’ end-of-day cash positions by denomination, providing that historical data used to forecast more accurate orders and deposits of cash.

And according to Phillips, the credit union’s cash management will keep improving as its people and its software continue to work together.

Excellent communication and training remain essential to increase understanding, confidence, and effective usage of the cash management software, he says.

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Visit Search Analyze on CreditUnions.com to check out your credit union’s performance profile. Then browse performance reports and build peer groups for more meaningful comparisons.

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So what impact did this turmoil have on credit unions? While complete third quarter data won’t be available for another three weeks, preliminary results reported through Callahan’s First Look program indicate performance remains solid. To gain some perspective, we looked at the three largest credit unions for an indication of key trends. These three credit unions can be considered bellwethers for the industry.

In the third quarter, Navy (VA, $31.45B), State Employees (NC, $15.09B), and Pentagon (VA, $10.50B) all recorded strong financial results.

Double-digit growth was posted in key balance sheet categories and membership continues to rise. Summary performance is shown below for these three leaders. Highlights of their performance include:

• Navy had standout asset growth of 19.4% due in part to branch expansion. Fourteen branches were added over the last year, including five in the third quarter. Membership has increased 6.2% since third quarter 2006.

• At State Employees, the focus was on returning more to members as the 4.0% cost of funds is up by 50 basis points over the past year. Higher dividends resulted in 10.2% share growth led by 16% growth in money market balances.

• While many competitors pulled back from the mortgage market, Pentagon had a 28% increase in their real estate portfolio over the past year. Asset quality is not a concern as Pentagon has kept delinquencies low at 0.2%.

While performance will vary across credit unions due to external and internal factors, these leaders highlight the broad strength of the industry. Timely information is more important this quarter than ever. Callahan & Associate’s First Look program provides free preliminary data analysis for credit unions using Peer-to-Peer,the most comprehensive financial analysis software for credit unions. To find out how your credit union’s performance compares to others across the industry, submit your 3Q data in XML format to 5300@creditunions.com .

The post The Big Three: A First Look at 3Q Results appeared first on CreditUnions.com.

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