Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
CUs more efficient than banks says Celent study
BOSTON (11/15/11)--A new study comparing efficiency ratios of similarly sized banks and credit unions says that credit unions are about 10 points more efficient than banks.

Boston research group Celent noted in its study, "EfficienCU: An Examination of Bank and Credit Union Efficiency Ratios by Asset Tier,"  that "credit unions are consistently more efficient than banks of the same asset tier."  In its comparison of efficiency ratios from 2004, 2206, 2008 and 2010, it noted "a noticeable disparity between relative efficiency" of the two groups.

Celent obtained bank efficiency ratios from Federal Deposit Insurance Corp. reports and calculated credit union efficiency ratios based upon the FDIC formula: noninterest expense less the amortization expense of intangible assets, as a percentage of the sum of net interest income and noninterest income, said Celent.

The minimum viable size for a bank is between $100 million and $300 million in assets, while the limit is roughly half that for credit unions, said Celent.  "Reasons for this disparity can be seen in the way each type of institutions handles product lines, customer centricity, commercial banking, resource sharing, and technological investment," said the report's abstract.

"Celent sees no reason why this disparity in relative efficiency will not continue into the future," it added.

"Credit unions don't participate in commercial lending, which is an 'inefficient' part of banking.  They also have shared service centers, which enable more scale and greater efficiency," said Bart Narter, senior vice president of Celent's Banking Group and author of the report.

For more information, use the link.
Other Resources

RSS print
News Now LiveWire
If you were unable to watch or attend @cuna 's @thehill Hill forum on Wed., you can now watch the archived version: http://t.co/FhUnp7HbU8
1 hours ago
Time is running out. If you haven't taken the #NewsNow readership survey, please click here now: http://t.co/4Gp6C2Wa4o
1 hours ago
African financial inclusion possible with mobile money: @IMFNews study http://t.co/0V5DTQToxY
2 hours ago
Louise Herring's birthday is Saturday. 105 years later, her legacy lives on through her kids http://t.co/oMqGADmo0d http://t.co/T3NmS9NqEY
2 hours ago
#Creditunions in PA and NJ hosted retirement fairs this week @PCUA and @NJCUL report.
3 hours ago