Credit Union Accounts - Key Ratios

Just received figures from e-services and communications credit union (aka the old Telecom Eircom Staff Credit Union)
Tried as best I can to stick to Rainyday's original format.......

Highlights are:

General
Number of directors – 13
Number of supervisors - 3

Income & Expenditure

Total Income: €10,170,371
Interest received on member loans: €4,825,855
Interest paid on member deposits/SSIA (€927,486)
Investment income: €6,100,211

Total Expenditure: €2,500,986

Proposed Dividend on Shares (2.75%) €3,692,465
Loan Interest Rebate (20%) €975,171


T/f to statutory reserve €2,759,687
T/f to other reserve €394,465
Undistributed surplus €1,993,364


Balance Sheet;

Members Loans €57,111,921
Bank deposits and investments €151,981,639
Total Assets €213,928,686

Members Shares €133,810,154
Total Liabilities €213,928,686

Management Expenses;

Travel & Subsistence: not separately identified
Entertainment costs: not separately identified
Board and committee expenses: €31,683
Treasurers Honorarium €12,000
Supervisory Committee €15,879
Loan/Share benefit claims €518,429 (CU self insures this now; used to insured with ILCU joint policy; provides for loans to be cleared and share balance doubled on death of member)
Bad Debts written off €251,706
Bad Debts recovered €197,299

Provision for Bad and doubtful debts
Balance b/f €2,263,410
Provision €392,222
Balance c/f €2,655,632 (= 4.65% of loans!)

Loan Interest Rates (before 20% rebate)
8.9% Standard
6.5% Fixed 3 year car loan
5.5% Secured property loan


My Comments:

Seems to be very well run. Fairly modest expenses. Competitive loan and dividend rates especially after 20% rebate. I believe, "anecdotally", that loan to share ratios of well over the standard 4/1 are available depending on circumstances.
Good return achieved on investment income.
A bit shocked at high level of bad debts/bad debt provision. Although it seems a very conservative policy is in effect which maybe goes overboard on making VERY prudent provision. EG 100% provision is made for loans where the principal is more than 53 weeks in arrears. In fairness, the actual written off figure is quite low.
 
Observer

There's a legal requirement for Credit Unions to fully provide for loans 53 weeks in arrears...part of the way Credit Unions are regulated.

Brendan
PBT dosen't arise as CU's are tax exempt. Would suggest net operating income as a proxy here. Also I would look to net interest margin before investment income.

Have a stab at average loan interest ie average loans/interest income where rates are not provided.

Certainly the investment to total loans+investments ratio is key as this indicates (a) the degree of liquidity and (b) is an indication to the scale of underlending.

Efficiency ratios such as cost/income are somewhat open to interpretation given that some CU's use a greater number of volunteer/unpaid staff than others. Average salary/employee would be a better indicator here. Also try gross income per employee cost.

Also there is a differing cost profile between the community and employee based operations. Generally employee cost income ratios are lower refeleting lower fixed and variable operating costs.

Word of warning: accounts are reported differently ...so adjustments have to be made.

To get a better picture or create a benchmark performance index it's probably better to use a tiered scale ie Community CU's with assets less than €10m,€50m and €50m+ and likewise for employer CU's. Given the number of CU's it's best to use a sampling system would suggest 5 of each category.
 
Riddler said:
Observer

There's a legal requirement for Credit Unions to fully provide for loans 53 weeks in arrears...part of the way Credit Unions are regulated.
Click to expand...

Fair enough, I didn't know this, thanks.
 
St Patrick's (Cork) Credit Union
Year ending 30th September 2005

General
Number of directors – 9
Number of supervisors - ?

Income & Expenditure

Total Income: €485,844
Interest received on member loans: €340,409
Sundry Income: €1,198
Investment income: €144,237

Total Expenditure: €212,956
Excess of Income over Expenditure: €272,888
Add:
Dividend Overprovided in Previous Year: € 2,195
Loan Interest Overprovided in Previous Year: € 1,047


Proposed Dividend on Shares (2.0%) €114,526
Loan Interest Rebate (10%) €34,041


T/f to statutory reserve €111,938
T/f to general reserve €15,625
Undistributed surplus carried forward €0

Balance Sheet;

Cash and Balances at Bank: €160,674
Members Loans €2,975,763
Less: Provision for bad and doubtful debts: (€101,948)
Bank deposits and investments €2,998,372
Tangible Fixed Assets: €1,084,678
Debtors, Prepayments and Accrued Income: €9,726
Total Assets €7,127,265

Members Shares €5,649,973
Total Liabilities €7,127,265

Management Expenses; Total: €106,170

General Insurance: €39, 124
Promotion and Advertising: €4,744
Bad Debts written off €11,769
Bad Debts recovered €372

Provision for Bad and doubtful debts
Balance b/f €101,948
Provision €20,000
Balance c/f €121,948
Loan Interest Rates (before 10% rebate)
APR 12.6%
 
Clogherhead Co. Louth CU

No of Directors - don't know
No of supervisors - don't know

Total Income € 314,117
Total Expenditure € 153,214

Balance Sheet
Deposits & Investments € 1,880,357
Loans to Members € 3,310,896
Total Assets € 5,553,237

Members Deposits € 542,217
Members Shares € 4,164,459
Total Liabilities € 5,553,237

Reserves
Statutory Reserve € 456,000
Undivided Earnings € 20,743
Development Reserve € 41,088

Proposed Dividend 2.5% (2004 2.5%)

Management Expenses € 154,801



Notes…
I don’t know how many Directors/Supervisors there are. It is not stated on the accounts. How does one find out? Is it really that important to the ordinary saver/borrower?

More figures are available; if anybody wants them I can post them.

What does these figures mean to me? How does Clogherhead CU compare to other ones apart from the fact that they seem to be much smaller? Is 2.5% dividend a reasonable rate? (I presume this is the “interest” they pay on savings). How does one find the Loan interest rate and/or Loan Interest rebate?

BB
 
BB
Some CU's use interest rebates, some don't. It's up to the board. If an interest rebate is paid then this has the effect of reducing the amount available to pay a dividend on shares. Dividends are currently ranging 2.25-3.0% this year.

R
 
Monaghan Credit Union held their AGM last night.

Total income 6.5 million
Total Expenditure 5.6 million

Total assets 98.5 million

Proposed dividend 1% (2004 = 1.75%)

Loans at start of year 73.1 million
Loans written "down" 7.15 million

Loans at end of year 57.7 million

Directive received from regulator preventing payment of proposed dividend.
 
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