How To Measure Member Value With ROM
Callahan's Return Of The Member (ROM) Index
For better or worse, credit union leaders are regularly bombarded with financial performance numbers, like growth rates, interest margins, returns, and net worth. Monitoring these metrics is important to ensure a sustainable and functioning credit union, but it can be easy to forget that the people you serve are more than just numbers, they are the purpose.
The Return of the Member Index (ROM) is a holistic scoring system that uses the quarterly 5300 Call Report to assess the value a member derives from a credit union against relevant peer groups in three main areas of operations:
- Return to Savers.
- Return to Borrowers.
- Member Service Usage.
This system allows credit unions like yours to evaluate and measure member value beyond standard financial metrics or the NCUA CAMEL scoring system. The goal of ROM is to maintain a stable and long-lasting institution while also returning value to members.
Make the most of your ROM score (Click to jump):
Additional Common Questions:
How Is ROM Calculated?
ROM scores measure a credit union's value relative to the peer group. The score is calculated based on 18 metrics across three categories:
Return to Savers
- Dividends/Income
- Average Dividend Paid
- Growth in Average Share Balance
- 3-Year Share Growth
- Number of Share Accounts per Member
Return to Borrowers
- (Loans + Servicing Portfolio - Purchased Participations)/Shares
- Yield on Average Loans
- Loans Per Member
- 3-Year Loan Growth
- YTD Loan Originations per Member
- Growth in Average Consumer & RE Loan Balance
Member Service Usage
- Share Draft Penetration
- Auto Loan Penetration
- Credit Card Penetration
- 1st Mortgage Penetration
- 3-Year Member Growth
- Fee Income per Member
- Total Income per Salaries & Benefits
The metrics are compared to the credit union's peers, and the resulting percentile scores are aggregated and weighted to create a final ROM percentile ranking. Credit unions with a score of 100 are considered leaders in returning value to their members compared to their peer group.
How To Find My Credit Union's ROM Score In Peer Suite
- Assess your score against your relevant peer group.
- See your performance and how your score is calculated to better identify successes and areas of improvement.
- Run a deeper dive on key metrics to weave into your strategic plans.
Follow along with the below slide show to find your Credit Union's ROM Score.
- Start by adding a relevant group of peers to assess your ROM Score.
- View your score and rank against your selected peer group(s) by viewing the "ROM Leader Table."
- Then look for areas of opportunity and improvement.
- Leverage the "Return Of The Member" display within the same folder to do a deeper dive on areas your credit union is exceeding on and where you could improve.
- Further your research and strategic decisions using individual displays within "Member Metrics."
What Does A High Score Mean?
A high ROM score (close or near 100%) means that you are returning value to members at a higher level than most of the credit unions in your peer group. This can often be translated to your credit union putting members first.
Credit unions can create a positive cycle of performance by offering products and services that benefit their members and encourage members to fully utilize the institution's offerings.
Although some ROM metrics have an inverse relationship on credit union earnings, such as loan yields, it is still possible to have both a high ROM score and strong financials by having an engaged membership.
How Can I Improve My Score?
Using Peer Suite's "Return Of The Member" display seen below users can view the different categories that make up each component and quickly identify areas of opportunity.
Can I use ROM in strategic planning?
Yes! The ROM Index is designed to help credit union leaders quantify the value of member impact, for use in strategy and development.
That said, maximizing ROM scores cannot and should not be the end-all goal for credit union leadership. Distributing all net worth to members in a single year might give a high ROM score for the period, but if it causes the credit union to liquidate, that won’t be good for membership in the long term.
ROM is a supplemental metric to help offset the money-centric traditional financial metrics used in most strategic planning sessions. It reminds us that the member comes before the money. However, it must be built in conjunction with stable financials, to ensure that the credit union remains healthy for membership over the long haul.
Can We Leverage Our ROM Score In Marketing Materials?
Yes! Callahan encourages credit unions to promote the value they return to members.
Serving member-owners is the key credit union difference that makes our industry so special. Success in these areas should be something that we promote as an industry to help bring more in-need Americans into the cooperative movement!
Additional Common Questions
What Is The Difference Between Historical ROM And The Leader Tables?
- The Historical ROM display captures the appropriate pre-calculated asset group (determined by the NCUA) to track how a credit union has performed in this space over time.
- The ROM Leader Table compares a credit union's ROM scores against those in their chosen peer group.
Why are there two different methods to calculate ROM?
Callahan occasionally revisits the weightings of these key metrics in the ROM calculation, to adjust to the general macroeconomic situation and priorities of the industry. For reference, Callahan presents both methods of calculation for historical look back in Peer Classic. In Peer Suite, you’ll find just the most recent method.
Why does my ROM score differ between two displays in Peer Suite?
Some ROM scores are designed to use a “locked in” ROM score, which is based on the primary credit union’s NCUA asset-based peer group. This score uses the defined fact "SavedROM" (seen below) and is fixed for a credit union no matter your comparison set. This is the "defined fact" used in Historical ROM displays.
Other ROM displays are designed to be customizable to your own custom peer groups. These displays contain formulas like ROM2pct (seen below). This what you'll see reflect in the ROM Leader Table Display.
