Credit Union Accounts - Key Ratios

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RainyDay

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I presume that those of us who are CU members will be receiving our annual accounts around now. Would it be an interesting exercise for us to record some of the key figures across a range of credit unions? It's very difficult for me as a member of a single credit union to assess the figures for travel & subsitence, entertainment, ad debts written off, general reserves etc? However, if we had these figures for a fairly broad range of CU's over a few years, it would make it much easier to pick out key areas for attention. If we can get comparable sets of figures posted in a consistent manner in this thread, I'll look after getting them into a spreadsheet form for ease of analysis.

I'll make a start with the figures for Dundrum Credit Union for 2005 (year end Sept 2005) . I'm open to suggestions for other figures that we should be tracking.

General
Number of directors - 14 (CU Act requires odd number, min 7, max 15)
Number of supervisors - 2 (CU Act requires 3 or 5)

Income & Expenditure

Total Income: €4,321,060
Total Expenditure: €2,434,833

Proposed Dividend:
Divident on Shares (2%) €1,205,972
Loan Interest Rebate (5%) €150, 682
T/f to statuatory reserve €206,111
Undistributed surplus €298,306


Balance Sheet;

Total Assets €83,194,705

Members Shares €64,953,758
Total Liabilities €83,194,705

Management Expenses;

Travel & Subsistence 21,200
Entertainment costs €6,019
Supervisory Cttee €4,963
Bad Debts written off €181,741
 
Good idea Rainyday

I will get the Sandymount figures and post them.

I would think that the profit before tax would also be a key figure.

A key problem facing Credit Unions at the moment is that they cannot lend all the money coming into them. So the percentage of money lent would be a very interesting statistic. It would be something like Loans to members/Deposits from members.

Do they all have the same year-end? What is the period to which the Dundrum accounts are made up to?

Brendan
 
Cost income ratio is a standard measure of efficiency for financial institutions.

Comparing income to expenditure for Dundrum, it looks like it's 56%, which would be considered quite high.

Return on equity of 3% (net income/members' shares) of 3% isn't great.

Bad debts written off as 4% of income (and 4% of net income as well), strikes me as somewhat high.

Dividend cover of just over 1.5 times, is low for a corporate, but I don't know how relevant this is for CU members.
 
The financial year for Dundrum is to end Sept 2005.

I don't think CU's have a profit figure, as they are non-profit organisations. Should we simply track income & expenditure and note any surplus remaining?
 
I found an annual report for my CU from a few years back and the income and expenditure account states a figure for "excess of income over expenditure" and one for "undistributed surplus carried forward" which is the previous figure less stuff like (well in this specific year anyway) transfers to statutory reserve, proposed dividend, write off loss on investment, transfer from special reserves and under provision for dividend. I guess that the first figure is akin to gross profit and the latter is akin to net profit?
 
In a for profit business, the key measures would be profit and return on capital employed.

The objectives of the Credit Union are to provide cheap loans and to encourage savings. So I think the primary measure of a Credit Union's performance should not be profit, but the rate of interest they charge and the dividend they pay.

The solvency of the Credit Union is very important as well, so some ratio of loans to reserves would also be relevant.

Efficiency is important but not as important as it is for other organisations.

Brendan
 
The same annual report that I mentioned above (from 2002 as it happens) makes no mention of the rate charged on loans and, in my experience, it has often proven difficult to get a clear answer (i.e. an APR that included all costs including the cost of keeping money on deposit/in shares). I suppose I should really attend the AGM and ask but (a) it's always on too close to Christmas for me to attend and (b) I'm only still a member because inertia has prevented me from closing my account and putting the money elsewhere since I am unlikely to ever need to use the services provided by the CU.
 
asdfg said:
2% of €64,953,758 is €1,299,075
What happened the difference?
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Is the dividend payment calculated on the shares outstanding at the year end or the start of the year or averaged over the year etc...?
RainyDay said:
Number of supervisors - 2 (CU Act requires 3 or 5)
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Are they not in breach of the regulations here?

Bad Debts written off €181,741
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2% of total assets? Seems pretty high? At least somebody's getting a good deal from the CU (i.e. loan defaulters)! :(
 
I would have thought that efficiency is just as important to credit union as to any other business as surely the more efficient the CU in question is, the lower the rate of interest it can charge it's members?

I wonder if the bad debts figures include loans written off that had been advanced to members who had died during the year (AFAIK, CUs write off the balance outstanding when a member dies)?
 
CCOVICH said:
I wonder if the bad debts figures include loans written off that had been advanced to members who had died during the year (AFAIK, CUs write off the balance outstanding when a member dies)?
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Shouldn't do since all (?) CU loans come with "free" (except it's not really) life assurance which clears the loan if the borrower dies. See [broken link removed]. Although maybe some of the bad debts were excess above the pay outs on such policies that were not met?
 
Sandymount Credit Union
Analysis for the year ended 30 September 2005

Loans to members: €10.2m (2004: €9.2m)
Total reserves:€20.7m (2004: €18.5m)

Growth in loans: 11%

percentage lent: 50%

Proposed dividend: 2% (2004: 2%)


Standard rate of interest: 8.93% apr ( 9.4% less 5% rebate)
Cheapest rate of interest:5.65% apr (5.95% less 5% rebate) on loans over €30k
Note: No provision is made for the obligation to keep money on deposit at 2% while borrowing. This could push the true apr up to 12% or more.

Total expenditure: €459k (2004: €391k)

Expenditure as a percentage of total reserves: 2.2% (2005: 2.1%)

Bad debts written off: €54,780 (€17,919)
Bad debts recovered: €13,679 (€17,578)
Net bad debts: €41,000 ( 2004: nil)
As percentage of loans outstanding at end of year: 0.4%
 
ClubMan said:
Is the dividend payment calculated on the shares outstanding at the year end or the start of the year or averaged over the year etc...?
:(
Click to expand...

I think the dividend is calculated on the average balance held in the account over the year. Most credit unions seem to have a year end of 30th September.
 
Brendan said:
Standard rate of interest: 8.93% apr ( 9.4% less 5% rebate)
Cheapest rate of interest:5.65% apr (5.95% less 5% rebate) on loans over €30k
Click to expand...
Do these APRs include the cost of keeping money on deposit/in shares while borrowing?
 
Brendan said:
No provision is made for the obligation to keep money on deposit
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It is not just an obligation, it is the LAW! See Credit Union Act, 1997 Section 32.

If, when you draw down a Credit Union loan, you have savings, either in Shares or Deposits, the Credit Union is obliged BY LAW not to allow you to withdraw to a level below 25% of your outstanding liability.

However that does not mean you need to have 25% of the loan value in savings before you get a loan. It's a case of suck it and see. If you want a loan ask what you need to do to get it. If you are obliged to lock away 25% or more of the value then do the maths. Darag's calculator gives a good indicator of the ultimate price you'll pay. Now whether it is an accurate APR, or the alternative "...TRUE APR...", that's just semantics...:)

Did Sandymount CU ask you to "...keep money on deposit at 2% while borrowing...", and if they did how recently did they do that?

Many Credit Unions don't!

I somehow doubt if Mr Kenny of Bishopstown Credit Union who is quoted in the I.T. of Fri 18th Nov as having said,
...that the credit union hoped to be in a position to offer mortgages in January at the latest...
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, will require you to have 25% of the mortgage value locked in for the next 25 or 30 or 40 years...:rolleyes:
 
Last edited by a moderator:
HI Crugers

This thread is for discussing the performance ratios of Credit Unions. If you want to discuss the merits and demerits of this requirement/law, please do so on one of the other threads which has discussed it.

Brendan
 
Hi Brendan
So which performance ratio is
Note: No provision is made for the obligation to keep money on deposit at 2% while borrowing. This could push the true apr up to 12% or more
Click to expand...
referring to?
I just thought I'd explain your red herring!
 
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