How to Nuke the Numb Numbers Monster
The Numb Numbers Monster has two heads facing different directions; one that makes all kinds of brand promises, and one that actually does the opposite.
Fortunately, you can train the Numb Numbers Monster so that both faces sing the same song, but first you have to answer one big question:
Do your CU’s numbers match your brand and marketing?
Numbers. The bane of most marketers. But don’t let digits scare you off – you need to find out if your marketing matches your reality.
Here’s how to check a few key numbers from your credit union’s financials to see whether the Numb Numbers Monster is keeping you from truly living your brand.
How to get your Credit Union’s Financial Performance Report
- Use the Research a Credit Union tool on NCUA’s website to find your CU:
https://mapping.ncua.gov/ResearchCreditUnion.aspx - Click “Request FPR” (you can also get Call Reports or Profiles here if you want to explore further.)
- Choose “I want to view a 2-page FPR summary for one credit union online.” and click “OK”.
- Click “Ratio Analysis”. Finally! (If you don’t see any results, or the “Peer Average” column is N/A, go back and change to an earlier Report Cycle.)
Key numbers in your credit union’s FPR
We’re looking for the numbers that touch on how your CU actually treats members, what you actually spend money on, and who you actually serve.
What we’re looking for is evidence for whether actual behavior and trends align with your strategy and your brand. Then you can think about what the explanations might be, what might need to change, and how to change it.
Net Worth / Total Assets
Compared to peer credit unions, where do you stand and what’s been the trend? This is a broad measure of overall financial resilience as well as management philosophy and conservatism. It’s a balance between making sure capital is put to work for your members and managing risk.
A low but slowly growing ratio may mean you’ll need to focus on income and rebuilding for a while longer, and budgets will be less flexible.
A higher ratio than average may mean there’s a very conservative management philosophy in place, one that needs to make room for investment and change.
Delinquent Loans / Total Loans
The most common problem we see here is actually a delinquency ratio that’s far too low – that means you might be turning down lots of profitable loans. It could also mean you’re developing a reputation as a tough lender.
If you serve lower-income SEGs, if you have a low income designation, or if you’re trying to appeal more to younger members, this could be a huge brand disconnect.
Conversely, if your members tend to be higher-income and you’re attracting your share of younger members, then a low DQ ratio might make sense.
Return on Average Assets
This ratio is closely related to the above; if it’s low, it may be an indication that you’re only making loans at super-low rates to people with high incomes and excellent credit; that’s a tough, hyper-competitive niche.
But if your members are more of a mixed bag, perhaps you’re not paying enough attention to younger or lower-income members.
Fee & Other Op.Income / Avg. Assets
This one’s easy; compared to peer CUs, are your fees generally higher or lower?
Does that fit your brand message? Are you telling people they’ll save money and then whacking them with high fees?
Or if your fees are super-low, how are you making up the income?
Keep in mind that these numbers also reflect local conditions; operating expenses (and thus fees) are often higher in cities with higher cost of living.
Borrowers / Members
This one’s also pretty easy. If it’s low compared to peers, you probably have room to grow loans within your current members. So how much do you need to grow, and where’s that loan growth going to come from?
If you want to target younger members, are you actually willing and able to lend to them? What mix of loans are you targeting? Where are you losing out on loans?
There are other explanations for a low ratio as well, of course. For example, you might have a lot of college student members, so while they don’t have a lot of loans now, those will come later on in life.
If the number is high, that’s great – maybe it’s time to concentrate more on membership growth to keep the ball rolling. Or perhaps you’re a little underpriced and need to adjust.
Members / Full Time Employees
It’s important to be efficient, but does this align with how you want to serve members? If “personal service” is an important part of your brand, then you might have more members/staff and more branches than peers.
Or if “high tech convenience” is your brand, then with the right technology you can be more efficient with fewer branches and staff.
Salary And Benefits / Full-Time Empl.
Does this number make sense for your area and your operation? If it’s higher than the peer average, it may be that you’re in a higher cost of living area or you have more salaried employees vs. hourly.
If it’s low, are you sure you’re paying enough to compete locally for the best talent?
Avg. Shares Per Member
This number is all over the map – there are thriving credit unions with very low and very high Shares Per Member. But take a moment to ponder your number and make sure it makes sense for your current membership and your future membership growth plans.
If it’s low, yet you generally serve higher-income people, where are they going?
If it’s high, are you losing out on lower-income members?
The Numb Numbers Monster is a shifty, slippery beastie.
He seems to be blurry and hard to understand, which scares off many stouthearted marketing adventurers before they ever get close. But with a pure heart, clear vision, and unwavering accountability, you can make sure your CU’s actions always match its promises.
- CU Numbers Need Marketing Love, Too - April 2, 2024
- Will it blend? The only CU fintech question that matters. - February 13, 2024
- Solving the CU marketing “now what?” problem - January 16, 2024