Core Technology Average Credit Union Efficiency Ratio per State: How Do You Stack Up?


Average Credit Union Efficiency Ratio per State: How Do You Stack Up?

Efficiency ratioAs we begin the new year, many of us find ourselves taking stock of our performance in 2017. What worked, what did not, areas to build upon, ideas to leave behind and new directions to pursue. Similar to the message we hear from our Commander in Chief in these early days of January each year, it's time to construct our own State of Union assessment, a sort of 'State of the Credit Union' if you will. Just how efficient were you, what is the average credit union efficiency ratio for your state, and how do you stack up against it?
By calculating your own efficiency ratio, you can determine just how much you spent to earn $1 of revenue. It can serve as an indicator of your success or suggest there might be some room for improvement, and generally help you monitor the relationship between your operating revenue and your overhead expenses. The efficiency ratio is calculated by taking the CU's operating expenses and dividing it by Total Interest Income (Interest Income - Interest Expenses) + Non Interest Income. This information is available publicly on the call report and can be accessed through the NCUA's website. Take a moment and see how you stack up.
Though there are several additional and helpful ways to assess the strength of your credit union, the Credit Union Efficiency Ratio is the key metric used to measure its overall efficiency in operation. An efficiency ratio of 70%, for example, indicates that you spend $.70 for every dollar of revenue earned... so the lower the percentage the better.This is a great goal to aim for and if you have accomplished this, you are in the top 10% of all credit union operations nationally. 
According to the report from Callahan & Associates, the average efficiency ratio for all credit unions in the country at the end of the third quarter 2017 was 71.54%. That’s 1.92 percentage points below the Q3 2016 average of 73.46%. The most efficient state in the country was Virginia, with a ratio of 55.4%. There is not much surprise there since the two largest credit unions in the country are based out VA, and when it comes to efficiency, economies of scale plays a crucial role. In most cases, larger institutions have lower relative costs and larger revenues.
If you have just missed the mark and come in higher than the national average, consider adopting new core technology and watch your efficiency grow exponentially. As you consider investing in this new technology and incorporating more efficient credit union software, keep overhead expense in mind. There's no need to break-the-bank in trying to achieve efficiency. Remember to take into account many hidden expenses, especially when calculating the Cost of Technology per Member (total cost of your credit union's technology divided by your member base.) Consider not only the initial outlay for the investment, but also re-occurring charges and the potential cost of third-party integration. 
With the right technology in place, you can see your day-to-day operations streamlined, data managed securely, and be able integrate cutting-edge fintech smoothly, all while still providing impeccable service to your members.
We invite you to learn more about your credit union's individual Efficiency Ratio and how technology can help you achieve the highest Efficiency Ratio possible. Comment below or reach out to us and we will reply privately via email with your CU's Efficiency Ratio.
7 Key Efficiency Ratios for Credit Unions
State Efficiency Ratio Average Assets
Alabama 75.96% $194,382,773
Alaska 77.70% $832,214,185
Arizona 76.27% $405,371,590
Arkansas 79.27% $50,900,839
California 72.65% $595,549,880
Colorado 70.93% $306,517,792
Connecticut 81.29% $102,897,356
Delaware 81.97% $124,659,794
Florida 73.72% $459,602,683
Georgia 73.63% $208,638,382
Hawaii 78.35% $187,385,276
Idaho 70.93% $270,510,690
Illinois 72.05% $164,458,247
Indiana 77.33% $173,947,996
Iowa 67.93% $182,112,386
Kansas 77.44% $116,058,869
Kentucky 70.23% $132,558,891
Louisiana 81.59% $59,566,358
Maine 80.15% $131,596,129
Maryland 76.72% $281,119,386
Massachusetts 75.33% $225,231,554
Michigan 72.82% $251,307,690
Minnesota 75.40% $194,585,601
Mississippi 72.56% $75,226,354
Missouri 78.63% $97,351,549
Montana 78.66% $96,944,104
Nebraska 80.17% $72,392,175
Nevada 75.97% $288,317,136
New Hampshire 78.11% $526,453,665
New Jersey 83.33% $81,561,818
New Mexico 70.28% $258,062,132
New York 73.47% $225,204,640
North Carolina 70.99% $742,191,880
North Dakota 76.12% $100,893,056
Ohio 76.24% $109,166,417
Oklahoma 71.71% $227,897,025
Oregon 72.97% $379,989,961
Pennsylvania 73.89% $116,738,321
Rhode Island 73.96% $304,190,327
South Carolina 76.10% $213,589,016
South Dakota 81.55% $80,501,533
Tennessee 71.44% $159,394,420
Texas 74.73% $213,990,526
Utah 68.77% $382,354,032
Vermont 80.71% $218,283,559
Virginia 55.40% $1,048,288,282
Washington 70.49% $570,449,092
West Virginia 81.26% $40,527,708
Wisconson 71.07% $261,920,775
Wyoming 76.41% $107,803,364
Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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