Empowering marketers with financial fluency: Navigating call reports and KPIs for strategic impact
Since the turn of the 21st century, credit union marketers have grown increasingly adept at accumulating data and putting into proper context. That’s objectively good—a more informed communicator and storyteller makes for a more compelling one in the marketplace. Less common though is a credit union marketer who understands their own institution’s performance data. While the successful brand champion has a solid grasp of consumer and market insights, an indispensable one can connect those insights to the needs of their credit union’s balance sheet and income statement.
Credit unions exist in one of the most highly regulated industries in America and have the obligation of quarterly financial condition disclosure to the NCUA. While this is certainly an accounting burden, it’s also an opportunity for even greater analytic context for the data-informed marketer. Having a uniform, standardized set of performance measures—growth, earnings, balance sheet composition, member engagement, productivity, risk—allows an executive to understand not only their own credit union, but also the entire American system and their peers both near and far.
Any good opportunity has a correspondent challenge, and this article addresses one of financial fluency for a credit union marketing leader. Many marketers are deft communicators of lead measures—visits, opens, follows, clicks, impressions—that convey upstream, top-of-funnel gross demand generation for the credit union. These measures are critical to the success of a modern marketing operation but are the proverbial ‘Greek’ to the rest of the organization. Most other disciplines around the leadership suite deal in lag measures—growth, yields, costs, losses, per-FTE, per-member—those indicators that are the net result of funnel output.
The brass ring for today’s financial marketer? Connecting lead marketing productivity with lag financial results!
Foremost, the role of the marketing leader at a credit union is demand generation and the key performance indicator for demand is growth. NCUA 5300 call report account and balance measures are accumulating values, so net growth is the only possible calculation in most cases. In other words, studying a call report for your own credit union or that of your peers will not provide insights into the gross number of total memberships originated. Rather, you will be able to study the net result of initial member count, plus members gained, minus any membership closures. Here are some recommended growth-rates to check out in the NCUA 5300:
- Member growth
- Balance growth (shares, loans)
- Account growth (shares, loans)
- Asset growth
- Revenue growth
- Expense growth
- Capital growth
Every credit union and membership that credit union serves represents different community needs, constraints, and priorities. It makes sense then that balance sheets can vary widely. Some credit unions carry 70%+ of their balances in real estate loans while others are predominantly auto. Some have high core deposits in basic savings and checking, others with a majority in CD and IRA balances. Understanding these different balance sheet mixtures can address key distinctions in growth-rates, earnings profiles, and risk appetites. Take a look at these balance sheet composition measures:
- Non-maturity shares/total shares (core deposits)
- Maturity shares/total shares (time or term deposits)
- Share drafts/total shares
- Loans/shares
- Loans/assets
- Auto loans/total loans
- RE loans/total loans
- Indirect loans/total loans
- Participation loans/total loans
Understanding member engagement with banking products can perhaps be one of the most useful insights for a credit union marketer. Reviewing per-member penetration ratios can help a brand leader to normalize adoption thresholds and better forecast engagement targets. These measures are key vital signs when considering the relevance and future sustainability of a financial cooperative. Review the following engagement measures:
- Share draft penetration
- Auto loan penetration
- First mortgage penetration
- Credit card penetration
- Products per member
- Average member relationship
- Fee income/member
The result of how balances are grown and arranged on the balance sheet and how members engage with balance-bearing products and fees is referred to as earnings. Studying various earnings profiles will help you as a credit union marketer to understand the wide range of personalities and priorities among peer credit unions. It will also shed light on how competencies and market opportunities intersect in different ways, and how credit union leaders manage the delicate risk-return balance of gathering shares, then lending and investing. Spend time with these key earnings indicators:
- Loan & investment yield (interest income)
- Non-interest income
- Interest expense
- Operating expense
- Provision for loan losses
- Return on average assets
- Efficiency ratio
- Coverage ratio
- Revenue per salaries and benefits
Low-cost deposit growth, managing loan delinquency, and controlling expenses are 3 key themes so far in 2024. What does your analysis of your NCUA 5300 tell you about your credit union? Other credit unions in your area?
Improving your awareness and comprehension of your credit union’s performance profile and profiles of your peers/competitors in your market is a matter of choosing the appropriate balance of insights, cost, and effort for your study. Fortunately, this data is public record and thus can be accessed for little or no cost to your credit union. Visiting NCUA.gov allows you to view an individual credit union’s filing, along with a key ratios analysis, and national asset class comparisons. Many credit unions also license peer benchmark analysis tools like Callahan Peer Suite or S&P Global Market Intelligence, or send staff to schools like the CUNA Management School or CUES CEO Institute. Don’t forget—your credit union’s own internal reporting may also be your best resource for quick knowledge. Regardless of which tools or resources you choose to study, keep these fundamentals in mind:
- “If you torture the data long enough, it will confess to anything.” Take time to know the definitions, tradeoffs, and limitations of performance data you study. Typically, financial performance data is descriptive, not predictive or prescriptive in nature.
- “Don’t rehearse until you get it right. Rehearse until you can’t get it wrong.” The American economic climate is constantly changing, and thus so does credit union performance trends. Know your current condition and how your performance is trending.
- “Success is subjective.” Your members and your market dictate your relevance and value. Keep comparisons in perspective then, minding differing identities, priorities, and risk appetites.
