Who is Callahan & Associates, and how do they rank the value of credit unions across the U.S.?

Callahan & Associates is a Washington, DC-based research and consulting firm specializing in the credit union industry. Among other resources, they have developed a quarterly Return of the Member index to rank all U.S. credit unions by their effectiveness in returning value to members. It's intended to provide a consistent, quantifiable metric to serve as a reminder of a credit union's mission to serve members first.

The index uses quarterly 5300 Call Report data to assess the value a member derives from the credit union against relevant peer groups in three core areas, including Return to Savers, Return to Borrowers and Member Service Usage.

Return to Savers
How well the credit union provides deposit services is calculated on the following metrics:

• Payout Ratio - What portion of its income does a credit union pay back to members?
• Average Dividend Paid - This is calculated by dividing the credit union's total dividends and interest paid on deposits by the credit union's total shares.
• Average Share Balance Growth - Are members increasing their savings balance? A greater increase yields a higher score.
• Three-year Share Growth - How have members responded to savings offerings over the last three years?
• Number of Share Accounts Per Member - Not only is this a measure of how many products are available, but whether they're good enough to prevent attrition.

Return to Borrowers
How competitively the credit union offers loan products is measured with an index that rewards institutions offering lower rates on loans, but also considers long-term loan growth trends and the variety of loan products available. Relevant metrics include:

• (Loans + Servicing Portfolio - Purchased Participations)/Shares - How well is the credit union converting savings back to loans?
• Yield on Average Loans - Lower loan rates can drive product growth and increase value to members.
• Loans Per Member - Is the credit union providing a variety of loan services attractive enough to gain usage by the membership?
• Three-year Loan Growth - How have members responded to the credit union's loan offerings over the past three years?
• Year-to-date Loan Originations Per Member - As a major gauge of loan activity, this can provide a key view of current lending trends at the credit union.
• Growth in Average Consumer & Real Estate Loan Balance - How are members using the credit union's consumer lending programs? Increased balances indicate more product usage and can be a metric of how members value loan products.

Member Service Usage
How efficiently a credit union provides and promotes services to members, indicating a high number of core account relationships with members, including:

• Share Draft Penetration - Do members consider this credit union to be their primary financial institution?
• Auto Loan Penetration - Are members using the credit union to finance their auto purchases? Auto lending is traditionally a core expertise of credit unions.
• Credit Card Penetration - What percentage of members carry and use a credit card provided by the credit union?
• First Mortgage Penetration - Do members come to the credit union for first mortgages? This is often the largest loan a member may have.
• Three-year Member Growth - Is the credit union bringing in new members? Attractive rates and products attract new members.
• Fee Income Per Member - How many fees does the average member incur? High levels of fee income generally decrease member value.
• Total Income Per Salaries and Benefits - The higher the ratio, the more effective the credit union is at generating revenue with its current staff level. This often reflects deeper member relationships.

The Return of the Member index assigns a numerical score, allowing for easy comparison with other credit unions and tracking of performance over time.