Questions you might ask

• What is this "HP" Rating System all about, and why?
The most profound principle of organizational effectiveness: "What Gets Measured… Gets Done!" The most effective organizations are those that focus directly on their key operational objective. For credit unions, this is to provide beneficial banking services to members and get members to use them. The "H-P" system is a performance rating standard that measures two key metrics –accounts-per-member... and...combined-average-balance-per account– that are the critical indicators of how well credit unions are achieving their most basic function– getting members to use their credit union accounts and services instead of doing personal banking at other sources.
• Why is a performance standard for credit unions so critical?
A fact inherent to all organizations is that their base purpose, over time, tends to be diffused by an ever-expanding number of institutional concerns. Another way to say it: It is the nature of all organizations to slowly evolve into self-serving entities. So a performance standard that measures progress (gains) toward the base intention is a critical tool for maintaining organizational effectiveness. For-profit entities benefit from the constant measure of sales, earnings… and yes, profits! Cooperatives, social service agencies, governmental entities and others that function without a profit motive constantly struggle with the challenge of staying hard on target. Today, the real reason that holding sharp focus on productivity is so vital for credit unions-- is that the consumer banking market is now so oversupplied, with still more competition emerging, that holding and growing share of market is critical to survival. If a banking source's "customers" are using other sources for most of their banking services, the question of survival is a real issue. This IS the case for the majority of credit unions today!
• Don't we already have a well-established performance standard? What about C.A.M.E.L.?
Yes, the national credit union community has a standard of sorts-- one that measures a particular (and important) set of factors. But the C.A.M.E.L. rating system belongs not to us, but to NCUA (just as it's sister program belongs to FDIC). It is used to assess some of the practices of credit unions-- specifically those relating to the responsible management of funds on deposit. In no way does this standard purport to measure the effectiveness of credit union performance relative to what benefits members get from the credit union. The "M" stands for "Management"; there is no second "M" for "Market Effectiveness". We call it the curse of the one-humped camel! In our experience most well-intentioned credit union CEOs tend to shun the top ("#1") C.A.M.E.L. rating as an indication of complacency and lack of member-oriented effort. "We never want to put the credit union at serious risk-- but risk IS part of what we do. So if we're not showing signs of being at least a little bit off the top mark, we're probably not doing much for our members."
• What is the ""HP"" benefit to credit unions?
The statistical data of credit union performance gathered by NCUA each year (each quarter, actually)-- consistently shows a direct correlation between increased levels of business on a per-member basis-- and-- both higher net earnings and increased cost efficiencies. Again, this year's figures show that, on average, "H-P" CUs generated almost three times the per-member net earnings than did non-HPCUs.
• What is the ""HP"" benefit to members?
Since credit unions, as non-profit co-operatives, return net earnings back to members in the form of lower-cost (or no-cost) services and more and better facilities, features, benefits and service-- those that do more business WITH members are able to do more FOR members. This is, of course, the advantage, and the promise, of the cooperative system! This is the essential reason why people should prefer to do business with credit unions, rather than with banks.
• What is the annual "High-Performers" list?
Every quarter, NCUA publishes 5300 reports of the performance for all U.S. credit unions. Once a year-- in March-- we pull the year-end set of this data and convert it from corporate totals to per-member averages to determine "H-P" rankings. Each credit union is measured against three basic criteria: 1) Average number of accounts-per-member ("at least 2.5" has been the standard since 1999), 2) Combined average account balances (HPCUs simply have to show numbers that meet or exceed the national average)…and, 3) ROA (HPCUs cannot show negative ROA figures for the year). That's it! All credit unions that meet those three very basic measures are listed as "HP" (High-Performer) Credit Unions for the current year. This list is posted on our website ( each Spring, as soon as we can make it ready. It remains up until the following year's data is posted. The annual posting lists each credit union that qualifies for "HP" status, along with state, accts/mbr, combined-average-balance and net-earnings-per-mbr data. This same data is made available to credit union trade press, national associations and leagues.
• What accounts and services are included in the count?
The accounts and services included in the tally are simply those listed in NCUA's 5300 report-- Shares, checking, MMAs, CDs, Retirement Savings (IRAs & Keogh Accts), "other" deposit accounts, credit cards, new auto loans, used auto loans, 1st mortgage loans, other real estate (equity) loans, and "other" loans.
• The credit unions on the list, are they all REALLY high performers…or just lucky?
Most credit unions that make the list consciously and deliberately focus on the specific objective of increasing the number of account relationships with their members. Digital CU in Massachusetts is one of the best examples of this group. Everything they do, every move they make, is directed to this end. And their performance is exceptional. Some CUs, on the other hand, are lucky in the sense that their particular circumstance or the demographic aspects of their membership provide them with definite advantages in terms of the amount of business their members want/need to do with them. The rest of the story is, this H-P performance standard has been in place only a short while, and most credit unions have NOT caught up to the idea of focusing specifically on increasing the number of per-member accounts. The criteria for achieving "H-P" is relatively mild, and will probably stay so until the broad tide of credit union performance rises to the point that "exceptional" performance will require a raising of the "minimums" bar.
• Looks like bigger CUs are more likely to make the list-- are small CUs at a disadvantage?
Yes…and no. Like it or not, large CUs have the economy-of-scale factor in their favor-- more momentum, more marketing clout. Small CUs have a totally different, but very powerful advantage. They are able to talk more directly, more personally, with their members-- if they choose to do so. There is, in fact, much proof of the possibility for smaller CUs to achieve "HP" status-- as demonstrated by those that have done so. Check them out! Over half the CUs on this year's "HP" list have fewer than 20,000 members! We firmly believe that small credit unions can significantly improve their performance simply by directing all their attention to the base objective of doing more banking business with each/all of their members.
• Couldn't CUs short-cut their way onto the list by dropping non-active members?
This would be an obvious move…and, we think, should be part of the strategy for achieving H-P status. But as everyone knows, this is a troublesome move to make. Nobody likes the idea of "cutting members loose". The best move, obviously, is to convert non-using members to primary banking connections. But that's not likely to happen. The fact is, most non-actives have cut themselves away from the CU already. They are getting their banking needs met-- but at some other source. So yes, dropping inactive users would certainly up the accts/member ratio-- once! From then on, the full effort must be extended.
• How does the program account for "Member Giveback"
This is an important issue for CUs, but it's not really a factor in the H-P matrix.. The "Member Giveback" factor is without definition at this point. Some CUs generate higher earnings per member, and give them back right away. Others give back at the end of the year (think bonus dividends and year-end loan rebates). Most give back in the form of new ATMs, branches, services, features and benefits. What's needed, of course, is a well-thought out standard for the "GiveBack" factor and a formula for how it should be accounted (CUNA CFO Council, where are you?).
• Aren't you causing problems for CEOs when directors don't find their own CUs listed?
Frankly-- we hope so! Especially if there are CEOs out there who are preoccupied with objectives other than what should be their primary one-- generating more business among members. But really, the standard is meant as a solution rather than a problem. The minute CUs see they are not listed as "High Performers"-- and are troubled by that-- the right things will start to happen. Also-- most CEOs we know welcome the idea of drawing directors to a common performance-based focus. It causes their "bosses" to see what they are really accomplishing. The H-P standards are such that it isn't hard to qualify. It will definitely take effort and probably more time than people would hope or expect. But the key factor that will cause it to happen is holding specific focus on increasing accounts-per-member!
• You've changed the "HP" formula from when you first began– how and why?
Our first version of the "HP Standard" simply measured accounts-per-member for all the nation's CUs on a quartile basis, and marked the top 25% of all CUs as "HPCUs". This is what first showed the remarkable correlation between accts/mbr and net earnings. But it was way too simplistic. And embarrassing. We later found too many CUs in the top group that actually had negative earnings for the year, and it's hard to correlate "High Performance" with negative numbers. So we adopted the present criteria: 2.5 (or more) accounts/ member, a combined (deposit/loan) average account balance higher than whatever the national average was each year, and positive net earnings. We suspect that, as the program develops and more players get involved, this criteria will be refined somewhat. But we do want to hold it to a simple, on-target formula that is clear and vivid, and measures the critical performance factor (amount of banking individual members do). And simple as it now is, it is, we feel, hard to argue with.
• What happens next? What is the future for the H-P Analysis program?
What we hope will happen is that opinion leaders within the national CU community will find this standard "right on" in its intention and particularly useful in its function. We'd like to see it embraced as a universal measure of the effectiveness of individual credit union performance. There's no copyright on any of it, it's out there, free for the taking.
• Why–what justifies you as the originator of the program?
Well, somebody had to do it! But here's a better answer. We've been working with credit unions since the mid-70s, and at rather significant levels. From now on, our paramount goal is to see credit unions, collectively, shift from operationally-driven programs, to market-driven entities in order to have a viable and relevant future. There's long been much talk of this; but it hasn't come close to happening...yet! But if one reads the message of the market, there really is no other option. And we're convinced that the "H-P" standard is a simple, efficient (and so far-- the best) solution to this end.