ORLANDO, Fla.–Credit unions need to learn to use equity more effectively, according to Sandler O'Neill Associate Director Peter Duffy during Credit Union Times' recent conference on non-interest income.
“Take the best of your culture and take it out for a test drive,” Duffy said. Focus on your competitors, not just your peer groups when making comparisons. Focus on return on equity rather than return on assets. “Make marketshare your key ratio rather than loan-to-share,” he advised.
True credit union growth does not come from mergers, as seven of the 16 fastest credit unions have done; Duffy pointed out that six have delinquency to total loan ratios double their peers. “Indirects and being loaned out got us where we are today,” he said.
Duffy noted a few credit unions, Digital Credit Union in Massachusetts among them, that are truly growing organically. He added that banks might be doing a better job, outgrowing credit unions in assets by 50% and opening seven times as many branches from 2003-2006.
“Challenge sacred cows–it's for the good of the membership,” he concluded.
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