WASHINGTON - Determining how a credit union stands relative to its peers in terms of returning value to its members is a complex issue. Callahan & Associates, Washington, has attempted to do just that with its Return of the Member (ROM) ranking system.
Callahan’s developed the system more than 10 years ago to measure the value that members receive from their credit unions. There are three components to ROM that reflect the central credit union functions of lending, savings and product usage.
The index, Callahan’s said, takes into account how well credit unions are delivering value by providing a raw score for each of the three components, then assigning a percentile ranking based on the scores of the other credit unions in their peer group. The final score is a weighted average of those percentile rankings and is then assigned a percentile rank using all the other credit unions in the peer group.
Return to Savers is weighted at 40%, Return to Borrowers is weighted at 35%, and Member Service usage is at 25%. The data used in the ranking is culled from the 5300 Call Reports.
Return to Savers measures how well a CU is providing deposit services to its members. In addition to measuring the average dividends paid, Callahan’s also takes into account the change in average share balance, the number of share accounts per member and the three-year share growth of the credit union.
The Return to Borrowers index rewards CUs that offer lower rates on loan and also considers the historical growth in lending and the variety of products on offer.
Member Service Usage measures how efficiently a credit union provides and promotes services to its members. Leaders in this category are those that have a high number of core account relationships with their members.
On this page are the overall ROM ranking and Return to Saver (ROS) ranking for the first quarter of 2008. Return to Borrower and Member Service Usage will be featured in a future edition.
Credit Union Journal is featuring the high-performers in the ROM ranking as part of its “Leader Board” series, which examines why and how the credit union’s management has been able to drive the CU’s success.
For more on Return of the Member, visit the Callahan’s website at www.creditunions.com.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
