What does it mean to be a successful credit union? Having worked in the industry for close to fifteen years I’ve found that, while individual credit unions may measure and track several key performance indicators, success appears to be generally defined as achieving ten percent asset growth and one percent return on assets, while maintaining a net worth of eight percent.
I am here to tell you those numbers are not a true representation of success.
I have gotten into the habit of explaining this to people with the following exercise: imagine you (the reader) and I (the author of this article) are the only two members of a credit union. At the end of the year the credit union has made $100 in net income, and we are given the option of each receiving a $50 dividend or having the credit union spend the $100 to attract a new member.
If you believe most people are both self-interested and myopic, as I tend to believe, then we would each choose to receive the $50 dividend (I know I would). Put in simpler terms, credit unions often do not focus on growth because they are structured to serve their existing members rather than concentrating on potential members.
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