How Does Self-Help Compare to Other Credit Unions?
January 6, 2009
Myth: Self-Help has different financial results than other credit unions, so it must be doing something wrong.
Self-Help's members have higher loan balances because its loans are predominantly home mortgages, rather than auto loans and other small loans offered by most credit unions.
For over 20 years, Self-Help's loan delinquency rates have been higher than its credit union peers because it makes home loans to low-income borrowers with few cash savings. These borrowers fall behind on their loans more frequently than borrowers overall when faced with an income disruption caused by divorce, illness or temporary job loss, but they remain committed to keeping their homes. In addition, Self-Help works very closely with borrowers to help them through these difficulties. As a result, very few Self-Help loans end in borrowers defaulting and losing their homes through foreclosure, a result reflected in Self-Help Credit Union's low loss rates of 0.26% per year over the past 5 years.
Self-Help has a higher return on assets than its peers because of lower expenses and a higher portfolio concentration of loans versus investments. Self-Help expenses are lower because it has fewer retail branches, fewer staff members, and its executives' salaries are significantly lower than its peers.[ii] In addition, Self-Help deploys a higher percentage of its assets into loans, which earn more than investments.
[i] Self-Help "peer" credit unions have $100-$500 million in assets. Financial statements available at National Credit Union Administration website.
[ii] Source: HR Value Group, LLC, 2006 Southeastern Region Credit Union Compensation and Benefits Survey
(435 credit unions in the Southeast replied to the survey). Selected representative salaries appear below. This survey was conducted approximately two years ago; Self-Help's salary cap in 2006 was $63,000.
CEO: 2006 average salary for credit unions in the Southeast with $200-500mm in assets: $151,426 ($146,700 median)
COO (or equivalent): 2006 average salary for credit unions in the Southeast with $200-500mm in assets: $97,671 ($98,455 median)
CFO (or equivalent): 2006 average salary for credit unions in the Southeast with $200-500mm in assets: $78,248 ($75,541 median)
More straight answers: Self-Help |