ALEXANDRIA, Va. -
"It doesn't matter if it's Navy FCU or some $10-million credit union," said John McKechnie III, NCUA's director of public and congressional affairs. "If you're a member of a specific credit union, that's the most important credit union in your life."
When it comes to CUs, size sometimes matters and sometimes doesn't, said John Kutchey, director of the regulator's E&I Division of Risk Management. Smaller credit unions as a body tend to be better capitalized, a phenomenon that Kutchy was at a loss to fully explain. However, a credit union's return on assets may be lower by design, a specific strategy to develop services and return more benefits to members rather than accumulate capital, Kutchey said.
"Asset growth and loan activity are good ways to measure a credit union's progress," said Kutchey. "ROA is a less reliable measure because we encourage credit unions to return the income as benefits to members, so a lower number may be a conscious strategy on their part."
NCUA examiners are encouraged to understand the strategy of each credit union they review so as to better be able to interpret the numbers they see, Kutchey added. Reviewing an institution's balance sheet without understanding its strategy can paint an incomplete and often incorrect picture.
"Each institution has a financial profile that should be based on decision made by its board of directors and should be evaluated based on how well it's serving its members," Kutchey said.
