SCOTTSDALE, Ariz.-That operating expenses are getting scrutiny is no secret. But where that scrutiny should lie sometimes is, stresses Cornerstone Advisors Inc.
"Expense-to-assets is the only ratio that credit unions will be able to move. I don't see anything else," said Senior Director Ted Thames. "We are in a very low rate environment, where its very difficult for credit unions to make a decent spread. And the government is trying to push down non-interest income. So how will you make money?"
The answer, he said, lies in processes that must be constantly evaluated and streamlined. Branch performance also needs to be measured, and tough decisions must be made about those that are not contributing to earnings. Thames noted an "interesting pattern" developing around branch performance among CUs that took on smaller CUs. "You wind up with a branch in a little town and another downtown. Now these locations may not be that efficient going forward. But it is very difficult to merge in a credit union and then close a branch."
Technology should not fall onto the chopping block. "There are many ways you can become more efficient if you leverage technology properly," with an eye to proper head counts.
