Strategic Assessment Initiative

The peer published by Cornerstone Credit Union League represents all federally insured credit unions in the United States. Peer statistics are typically presented by asset size and provide an opportunity to compare various aspects of the credit union operation to results from credit unions of similar size.

Peer ratios allow you to see a snapshot of financial performance ratios in an asset range and compare them to your own.

A review of peer provides valuable information. However, it is worthwhile to note that peer information should not be the only consideration when making decisions about your credit union’s future. First of all, peer statistics typically lag the market so the most current results may be three months or older. This means the peer averages, especially those that respond to the market environment, may be out of date and not reflective of current times. Second, because they are presented as a range of assets, your credit union may be toward the top or bottom of the range so a review of another grouping may be beneficial. Typically the more defined the range, the more valuable the peer information becomes. 

Typically they do not.  Remember that peer and good are not synonyms. While other credit unions may have similar results, there are systemic outcomes we know to be ideal on an annual basis and that should be our goal when assessing the credit union’s financial condition.

Credit unions have numerous avenues of information to use when making financial decisions. Years ago, NCUA issued a Letter that addressed levels of capital, earnings, and asset quality and how they were perceived in the CAMEL Rating process. The regulator has issued guidance concerning appropriate levels of liquidity and interest rate risk. We have peer information, regulatory guidelines, and economic results to consider. All are valuable in the decision making process.

An industry standard reflects the reasonable result in a specific area (earnings, asset quality, capital,) regardless of current challenges or the economic or regulatory environment. Internal factors, external factors, and economic factors all play a part in a credit union’s financial results. The industry standard may not be considered a CAMEL code 1 level and it may not align with peer results. It simply reflects what the industry knows to be satisfactory results year after year in that specific area. The reality is that all credit unions cannot attain a “code 1” level of operation all the time.

The resources are provided for your information and to stimulate new ideas. As with any new program or product offered by your credit union, you should thoroughly research and personally assess all vendors and external sources.