MADISON, Wis. -
Hoel found that nine factors contributed to excellent performance. The characteristics of these 330 "stars" can serve as a role model for credit unions regardless of asset size:
* They are highly effective lenders. Compared to peers and other credit unions, the loan-to-share ratios are higher. They make more loans in almost all loan categories than peers.
* Their members use their credit union extensively. The number of transaction accounts per 100 members, savings accounts and loans are higher at the stars than peers. Average-dollar values of savings and loan balances at stars are higher.
* They pay members higher rates for savings than similar size credit unions. Because they generate more loan and fee income, they are able to pay higher rates. Their savings rates attract deposits and asset growth soars.
* They emphasize high payoff product and services. Star credit unions are successful in growing used car and mortgage portfolios. Compared to peers, a large portion of their members have checking accounts. Laggards relied on traditional share accounts, stars compete for more price-elastic CDs or money market funds.
* They manage their expenses aggressively. Operating expenses at stars are much lower than laggards. Stars employ fewer staff per-million in assets and per thousands of loans generated, and their compensation and fringe costs are less. They have lower office operations and occupancy expenses.
* Their high deposit and loan balances per member cut their operating costs. High average deposits and loan balances are powerful tools for lowering expense ratios. Stars are successful in persuading members to place large portions of their savings and loans at their credit union.
* They do not rely on solely on low loan rates to generate loans. Stars often don't have substantially lower loan rates than laggards. Instead they offer convenience, speed and good service. They are aggressive loan marketers.
* They generate more fee income than their peers. Because large numbers of their members use the credit union's checking account products and other fee products, fee income is relatively high.
* They invest their capital in growth. Rather than building excessive capital as laggard credit unions do, stars invest in expanding their membership, increasing product and service offerings and growing their assets and loan portfolios.
They deliver member value while maintaining adequate net worth levels.
