The University of the West Indies

Cave Hill Campus

Department of Management Studies

MGMT 3076- Managing Financial Institutions

Lecturer: Mr. Gregory Hinkson

Semester II, 2017/18

A Comparative PEARLS Historical Analysis for

City of Bridgetown Co-Operative Credit Union Ltd and Your Credit Union Ltd for the Years
2013 -2017

Alisa Arthurs-
Asriel Browne-
Angeline Catling
Tristan Harewood
Shannan Skeete

Date:
Contents
Executive Summary...................................................................................................................................3
The Overview of the Credit Unions..........................................................................................................4
Caribbean Credit Union...........................................................................................................................4
Canadian Credit Union............................................................................................................................5
Summary of Financial Statements...........................................................................................................6
Caribbean Credit Union...........................................................................................................................6
Canadian Credit Union............................................................................................................................7
PEARLS Analysis......................................................................................................................................8
Protection....................................................................................................................................................8
Effective Financial Structure...................................................................................................................9
Asset Quality.........................................................................................................................................11
Rate of Return or Cost...........................................................................................................................12
Liquidity................................................................................................................................................14
Signs of Growth.....................................................................................................................................15
Conclusion.............................................................................................................................................17
Appendix..................................................................................................................................................18
Bibliography............................................................................................................................................18

Table of Figures
Table 1. Products offered at City of Bridgetown Co-Operative Credit Union..............................................5
Table 2. COB's Comparative Statements of Comprehensive Income as of 31 March for the Years 2013-
2017.............................................................................................................................................................7
Table 3. COB's Comparative Statements of Financial Position as of 31 March for the Years 2013-2017....7
Table 4. YCU's COB's Comparative Statements of Comprehensive Income as of 31 March for the Years
2013-2017...................................................................................................................................................8
Table 5. YCU's Comparative Statements of Financial Position as of 31 March for the Years 2013-2017....8
Table 6. The Protection Ratios...................................................................................................................10
Table 7. The Effective Financial Structure Ratios......................................................................................11
Table 8. The Asset Quality Ratios..............................................................................................................13
Table 9. The Rates of Return and Costs Ratios..........................................................................................14
Table 10. The Liquidity Ratios..................................................................................................................16
Table 11. The Signs of Growth Ratios.......................................................................................................18

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 Executive Summary
This report analyzes and addresses the financial performance of two similar credit unions,

namely The City of Bridgetown Co-Operative Credit Union Ltd of Barbados (COB) and Your

Credit Union Ltd of Canada (YCU) using their annual financial reports for the years 2013 to

2017. Barbados, is said to have one of the highest penetration rate of credit union memberships

globally, and COB is one of Barbados’ most established credit unions. Moreover, credit unions

also play a critical role in Canada’s financial sector as well. Therefore, despite the difference in

the locations, these credit unions were selected due to their similar asset base of approximately

$200 million US dollars which has made the task of analyzing them objective and

straightforward. Thus, the objective of this report is to examine the financial performance of both

credit unions using the PEARLS monitoring system, and to compare their outcomes to determine

which credit union is more effective according to the set standards.

PEARLS is a monitoring system used by credit unions which was formulated by The

World Council of Credit Unions in 1990 which uses financial ratios to monitor credit unions and

to rank them according to the set standards. It also aids managers in the creation and

implementation of strategic plans which will improve the credit union’s performance.

[ CITATION Ric09 \l 1033 ]. After conducting the PEARLS analysis using a total of twenty-

three ratios over the five-year period, the results show that Your Credit Union Ltd has performed

optimally in majority of the categories. This ranks them above The City of Bridgetown Co-

Operative Credit Union Ltd of Barbados, despite COB’s satisfactory performance in a few

categories.

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 Nevertheless, although each credit union has attained set goals in some segments, there is

still room for improvement to ensure that each credit union maintains a healthy financial position

and that unnecessary risks are not undertaken.

The Overview of the Credit Unions

Caribbean Credit Union
The City of Bridgetown Co-Operative Credit Union (hereinafter “COB”) was registered

on 20th October 1983 in Barbados. As at March 31, 2017, they are 59,688 members with an asset

base of $438 million. Membership is open and voluntary to all Barbadian citizens and

CARICOM nationals with a valid form of identification. COB was created due to the individuals

who were unable to receive funding from other financial institutions, pooling their resources

together to form the credit union. It is evident that COB tries to meet the need of their members

through Loans or Savings products such as mortgages and vehicle loans as well as Investments

products such as prosperity enhancers and earners. The list of all the products is shown below in

Table 1. The loans are mainly focused on different necessities which an individual may want.

Such as a mortgage, vehicle and gaining more liquidity through lines of credit.

Loans Savings and Investments

Home and Mortgage Loans Prosperity Enhancer
Vehicle Loans Prosperity Earner
Personal Loans Prosperity Provider
Lines of Credit Prosperity Securer
Other Loans Prosperity Pinnacle
COB Cares
Table 1. Products offered at City of Bridgetown Co-Operative Credit Union

The credit union also tries to inculcate the culture of saving from a young age through

their COB Cares programme. This programme is into three categories juniors, teens and young

adults to the age of 25. All members can access their funds through Easy Access ATM and Debit

Card, Internet, Telephone and Mobile Banking. Members who are overseas can transmit deposits

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through various methods such as electronic wire transfer, personal cheques and bank drafts. The

prosperity suite is named after COB’s passion. Products, Rewards, Options, Service, Peace of

mind, Experience, Relationship, Innovation, Technology and Youth are elements which matter to

COB. The savings plans each vary in minimum deposit, interest rates, length of investment

period and this allowed deposits or withdrawals. Each package is formulated based on the

possible lifestyles and ages of members. (COB Credit Union (n.d))

Canadian Credit Union

Your Credit Union Ltd (hereinafter “YCU”) has been in operation since 1950 and is

situated in the state of Ontario, Canada and is owned and directed by its members. The credit

union began as a financial co-operative for the teachers of Ottawa-Carleton and evolved to

encompasses members from the Ottawa Citizen, the City of Ottawa and OC Transpo, among

others. However, membership is now applicable for all Canadian nationals and permanent

residents with valid forms of identification since the credit union became an “open-bond”

institution in 2009, resulting in a steady growth in new members over the years.

The products and services Your Credit Union offers includes cheques and savings

accounts, safety deposit boxes, wire transfers, currency exchange, mutual funds, term deposits,

personal loans, lines of credit, payroll deduction, mortgages and registered retirement savings

plan loans. Additionally, they also offer VISA flexrate cards, online brokerage, index-linked term

deposits, registered education savings plans, phone banking, and registered retirement

investment funds. Your Credit Union offers the same range of services and products as a bank

but at a lower cost to personal members. The credit union also deals with small to medium sized

businesses offering lower costs and higher rates of returns with community accounts and

business chequing accounts, along with some other services provided to individuals. They also
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have over 3500 fee-free ATMs located nationwide for ease of access which be found across

Canada with the use of the mobile app. (Your Credit Union (n.d.))

Summary of Financial Statements

City of Bridgetown Co-Operative Credit Union Limited
Comparative Statements of Comprehensive Income as of 31 March for the Years 2013-2017
All amounts are expressed in Barbados Dollars (BBD)
2013 2014 2015 2016 2017
Income $ $ $ $ $
Interest on Loans 22,849,557 22,456,681 21,217,003 21,101,510 21,091,829
Investment Income 1,276,962 1,906,007 2,398,978 2,615,539 2,836,282
Other Income 1,255,074 1,331,809 1,105,527 1,097,011 1,269,873
Total Income 25,381,593 25,694,497 24,721,508 24,814,060 25,197,984
Expenditure:
Interest Expense- Member Deposits 6,859,621 7,386,579 7,699,296 6,987,459 6,071,140
Interest Expense- Loans Payable 390,903 629,632 575,371 463,888 304,066
Operating Expenses 11,813,772 12,048,609 11,766,979 12,418,071 14,397,232
Other Expenses 490,010 1,315,964 2,177,603 1,935,327 1,143,748
Total Expenditure 20,754,306 21,380,784 22,219,249 21,804,745 21,916,186
Net Surplus before Distributions 4,627,287 4,313,713 2,502,259 3,009,315 3,281,798
Distribution (2,598,586) (2,216,869) (1,899,664) (1,503,510) (1,676,923)
Net Income 2,028,701 2,096,844 602,595 1,505,805 1,604,875
Caribbean Credit Union

Table 2. COB's Comparative Statements of Comprehensive Income as of 31 March for the Years 2013-2017

City of Bridgetown Co-Operative Credit Union Limited

Comparative Statements of Financial Position as of 31 March for the Years 2013-2017
All amounts are expressed in Barbados Dollars (BBD)
2013 2014 2015 2016 2017
Assets $ $ $ $ $
Cash & Cash Equivalents 19,099,396 30,265,512 24,274,474 31,723,633 30,791,689
Accounts Receivable and 781,328 848,922 746,493 729,313 763,583
Prepaid Expenses
Net Member Loans 288,492,985 289,571,455 295,905,759 309,910,521 324,535,088
Financial Investments 26,717,007 33,677,508 43,912,839 44,841,554 55,673,601
Other Assets 6,025,173 6,000,009 6,010,130 5,738,213 5,910,059
Fixed Assets 18,454,116 18,616,837 18,673,430 18,206,292 20,738,935
Total Assets 359,570,005 378,980,243 389,523,125 411,149,526 438,412,955
Liabilities
Accounts Payable 2,647,369 2,928,047 3,821,090 3,357,878 3,580,077
Loans Payable 11,894,105 10,915,535 9,919,371 5,974,742 5,592,457
Members' Deposits 229,184,526 246,725,736 258,281,889 282,726,132 306,239,479
Other Liabilities 76,702,474 77,600,392 75,948,139 76,331,276 78,953,808
Total Liabilities 320,428,474 338,169,710 347,970,489 368,390,028 394,365,821

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 Total Members' Equity 39,141,530 40,810,533 41,552,636 42,759,498 44,047,134
Total Liabilities & Equity 359,570,005 378,980,243 389,523,125 411,149,526 438,412,955
Table 3. COB's Comparative Statements of Financial Position as of 31 March for the Years 2013-2017

Canadian Credit Union

Table 4. YCU's COB's Comparative Statements of Comprehensive Income as of 31 March for the Years 2013-2017

Your Credit Union Limited

Comparative Statements of Financial Position as of 31 March for the Years 2013-2017
All amounts are expressed in Canadian Dollars (CAD)
2013 2014 2015 2016 2017
Assets $ $ $ $ $
Cash & Cash Equivalents 13,783,000 22,016,000 5,640,000 4,790,000 6,157,000
Income Taxes Receivable 109,000 61,000 0 127,000 0
Net Member Loans 185,200,000 191,731,000 202,389,000 215,228,000 246,480,000
Investments 15,695,000 16,711,000 16,405,000 16,874,000 18,485,000
Fixed Assets 5,554,000 5,200,000 5,286,000 6,065,000 5,699,000
Other Assets 1,185,000 1,153,000 837,000 770,000 862,000
Total Assets 221,526,000 236,872,000 230,557,000 243,854,000 277,683,000
Liabilities
Income Tax Payable 0 0 110,000 0 93,000
Loans Payable 5,000,000 0 0 0 6,000,000
Members' Deposits 202,825,000 217,792,000 210,436,000 223,403,000 250,963,000
Other Liabilities 1,963,000 1,520,000 1,747,000 1,688,000 1,433,000
Total Liabilities 209,788,000 219,312,000 212,293,000 225,091,000 258,489,000
Members' Equity
Membership Shares 659,000 567,000 546,000 526,000 497,000
Investment Shares 2,640,000 8,533,000 8,748,000 9,081,000 9,414,000
Retained Earnings 8,439,000 8,460,000 8,970,000 9,156,000 9,283,000

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 Total Members' Equity 11,738,000 17,560,000 18,264,000 18,763,000 19,194,000
Total Liabilities & Equity 221,526,000 236,872,000 230,557,000 243,854,000 277,683,000

Table 5. YCU's Comparative Statements of Financial Position as of 31 March for the Years 2013-2017

PEARLS Analysis
The PEARLS ratios are useful in examining and interpreting the financial condition of

credit unions and due to its standardization, serves as a measure to compare among credit unions.

According to Richardson (2009), the main objective of PEARLS is to monitor the performance

of credit unions and identify underlying issues and thus, ensures that unnecessary risks are not

being taken with the member’s funds. We conducted an extensive historical analysis of PEARLS

for the City of Bridgetown Co-operative Credit Union (COB) and Your Credit Union (YCU) for

the years 2013-2017.

Protection
The protection ratios measure the level of safety for the member’s funds. Through

analyzing this indicator, one can ensure that the deposits of members are safely held by the credit

union. Allowance for Loan Losses/Delinquency > 12 months (P1) measures how adequate the

loan loss provisions are when compared to the loans which have been delinquent for over 12

months. As seen in Table 6 below, for COB, in 2013 P1 was at its highest at 21.87% in 2013 then

slightly fell to 21.29% in 2017. On the other hand, for YCU, in 2013 the ratio was at its lowest at

30.48% and gradually grew until 2016 where it tremendously amplified to 387.79% and slightly

declined to 204.29%. It is evident that the performance of YCU tremendously outweighs that of

COB. This might have been primarily due to the drastic decrease of delinquent loans that YCU

had and the increase in unpaid loans for COB over the years. It is recommended that COB take

swift actions to redeem the delinquent loans outstanding. Therefore, it can be observed that the

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deposits of YCU are extremely safe and that of COB is not very secure as compared to the goals

of excellence of 100%.

Table 6. The Protection Ratios

Effective Financial Structure

The Effective Financial Structure section deals with evaluating the most significant

accounts within the company’s balance sheet to determine the level of security, soundness and

profitability within the credit union. As seen below in Table 7, the Net Loans/ Total Assets ratio

(E1) measures the proportion of total assets which are invested in the company’s loan portfolio.

For COB, in 2013, the percentage was 80.23% but gradually decreased over the years to 74.02%

in 2017. It can be noted that COB reduced their assets invested in their loan portfolio.

Conversely, YCU has seen a steady increase in this ratio from 83.60% in 2013 to 88.76% in

2017. Therefore, since COB is within the range of excellence of 70-80% and YCU has exceeded

the goal, they both are performing satisfactory in this regard. However, it is evident that YCU has

outdone COB as they have more assets invested in the overall loan portfolio.

In addition, Financial Investments/ Total Assets (E3) measures the portion of assets

invested in the credit union’s long-term investments. For COB, there was a steady increase from

the lowest of 7.43% in 2013 to the highest at 12.70% in 2017. Unlike COB, YCU has

experienced a steady decline from 7.08% in 2013 to 6.66% in 2017. Since the goals of

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excellence is less than 2%, YCU has more appropriate results than COB, nevertheless, they both

have room to improve since they have not met the goal.

The Savings Deposits/Total assets ratio (E5) focuses on the percentage of savings and

time deposits that are used to finance the institution’s assets. With a goal of 70%-80%, COB has

barely fallen short with ratios of 63.74% to 69.85% between 2013 and 2017. Nevertheless, a

trend of COB gradually increasing this ratio can be seen, and it is expected that they will meet

the excellence goal shortly. As it relates to YCU, the ratios exceeded the goal with ratios from

91.56% to 90.38% between 2013 and 2017 despite a slight decline in 2017.Therefore, YCU has

demonstrated that they are exceptionally financially independent since the member’s deposits are

mostly financing the assets.

Table 7. The Effective Financial Structure Ratios

Moreover, The Borrowed Funds/ Total Assets ratio (E6) which deals with the portion of

total assets which are financed with external debt was 3.31%, 2.88%, 2.55%, 1.45%, 1.28% for

the years 2013-2017 respectively for COB. For YCU, in 2013, the ratio was 2.26% but in 2014,

the ratio was 0% until 2017 which amounted to 2.16%. Therefore, it can be noted that both

institutions maintained a low percentage of assets which was financed with external borrowings

which is satisfactory especially since they both met the minimum goal of less than 5%. Once

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more, YCU has outperformed COB. Additionally, Member Share Capital/ Total Assets (E7)

measures how much assets are financed by member shares which carries a goal of less than 20%.

COB has continuously maintained a ratio of 0% whilst YCU has made some improvements in

reducing these results from 0.30% in 2013 to 0.18% in 2017. COB does not maintain any

member shares unlike YCU. Therefore, in this segment, COB outperformed YCU.

Lastly, the institutional Capital/ Total assets ratio (E8), which focuses on the portion of

capital that is used to finance assets, has a minimum excellence of 10% and COB has surpassed

this goal each year despite slightly declining throughout the year, Therefore, it is recommended

that swift changes are made to increase this declining ratio before it becomes unsatisfactory. It

can also be noted that the gradual decline means that COB has been using less capital to finance

their assets. On the contrary, YCU has underperformed with ratios ranging between 0.52% and

2.98% over the years which shows that YCU’s assets are not largely financed by their capital and

does not meet the recommended goal. Thus, it is greatly recommended that YCU and to a lesser

extent, COB, make some improvements to ensure that an efficient financial structure is

maintained. However, in this overall segment, YCU has a more efficient financial structure than

COB.

Asset Quality
The asset quality section examines the portion of the non-earning assets which have

negatively impacted the profitability or the solvency of the credit union. Financial institutions

pay keen attention to this section since the quality of the assets can greatly affect the company’s

profits. The Total Loans Delinquent/ Total Loans ratio (A1) focuses on examining the total

portion of delinquent loans in the credit union’s overall loan portfolio. This ratio is quite

important because high level of delinquent loans can negatively affect earnings. In 2013 COB’s

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ratio was 36.21% but during the years, it has gradually decreased to 25.79% but is still

enormously distant from the goal of being less than or equal to 5%. Nevertheless, COB

mentioned in their annual reports that they are experiencing issues with delinquent loans which is

evident from their performance in this segment. YCU on the other hand, has maintained within

the goal and from 2.60% in 2013 to now 1.95% in 2017 which is commendable. In this segment,

YCU has a higher quality of assets than COB. These results can be viewed in Table 8 below.

Table 8. The Asset Quality Ratios

Rate of Return or Cost

The Rates of Return and Costs ratios (as seen below in Table 9) measure the average

earnings or returns on assets generated by the credit union. This determines if the credit union is

operating at a cost-efficient level and if the returns on its assets are acceptable. The Net Loan

Income/Average Net Loan Portfolio ratio (R1), which measures the return on the loan portfolio,

had declined for COB from 8.04% to 6.65% over the years. Also, YCU has experienced a slight

decline from 4.59% to 3.90%. Therefore, it can be observed that both COB and YCU

experienced lower returns on their loan portfolios in the most recent years, but COB has better

results.

The Total Income/Total Assets ratio (R3) measures how adequate the earnings and the

capacity to grow the institutional capital of the credit union are. For COB, the results fell from

7.06% in 2013 to 5.75% in 2017 whilst YCU results declined from 4.54% to 3.88%. This shows

that earnings have been less adequate however, it may not negatively affect the credit union

unless it is not enough to cover expenses and dividends. Moreover, the Interest on

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 Deposits/Average Savings Deposits indicator evaluates the yield or cost of saving deposits which

declined for COB from 3.11% to 2.06% and YCU from 0.48% to 0.25%. Therefore, it can be

noted that COB has the greater yield on their deposits when compared to YCU.

As it relates to the Staff Cost/Total Income indicator which measures the salaries

expenses as a portion of total income, COB’s results grew from 23.96% to 30.50%. On the other

hand, YCU results fell from 34.57% to 32.88% over the years. Since the goal is less than 15%

YCU has performed better than COB, nevertheless, they must both improve because high salary

expenses can hinder their ability to be competitive.

City of Bridgetown Co-Operative Credit Union

2013 2014 2015 2016 2017
R1. Net Loan Income/ Average Net Loan Portfolio 8.04% 7.77% 7.25% 6.97% 6.65%
R3. Total Income/ Total Assets 7.06% 6.78% 6.35% 6.04% 5.75%
R5. Interest on Deposits/Average Savings Deposits 3.11% 3.10% 3.05% 2.58% 2.06%
R5a. Staff Cost/ Total Income 23.96% 23.65% 24.43% 24.05% 30.50%
R5b. Expenses/ Total Income 81.77% 83.21% 89.88% 87.87% 86.98%
R9. Total Operating Expenses/ Average Assets 3.42% 3.26% 3.06% 3.10% 3.39%
R10. Loan Loss Provision Expense/ Average Asset 0.35% 0.22% 0.21% 0.17% 0.14%
R12. Net Income/ Average Assets 0.38% 0.38% 0.16% 0.57% 0.59%
Your Credit Union
2013 2014 2015 2016 2017
R1. Net Loan Income/ Average Net Loan Portfolio 4.59% 4.42% 4.20% 4.08% 3.90%
R3. Total Assets/ Total Income 4.54% 4.38% 4.52% 4.29% 3.88%
R5. Interest on Deposits/Average Savings Deposits 0.48% 0.44% 0.37% 0.27% 0.25%
R5a. Staff Cost/ Total Income 34.57% 29.91% 31.23% 32.48% 32.88%
R5b. Expenses/ Total Income 93.70% 97.63% 91.81% 94.79% 95.40%
R9. Total Operating Expenses/ Average Assets 3.10% 2.76% 2.62% 2.87% 2.61%
R10. Loan Loss Provision Expense/ Average Asset 0.12% 0.26% 0.17% 0.15% 0.11%
R12. Net Income/ Average Assets 0.18% 0.10% 0.36% 0.22% 0.18%
Table 9. The Rates of Return and Costs Ratios

In addition, as seen above in Table 9, the Expenses/Total Income ratio (R5b) measures the

expenses as a portion of income and has an ideal goal of less than 100%. COB’s ratio slightly

increased over the years from 81.77% to 86.98% as compared to YCU’s own which also slightly

increased from 93.70% to 95.40%. It can be noted that both institutions are operating within the

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goal however, there is room for improvement as both credit unions, especially YCU, has a large

portion of expenses as compared to its income which is unsafe and can prevent them from

meeting obligations and requirements.

The Total Operating Expenses/ Average Assets ratio (R9) looks at how efficiently the

credit union is operating and carries a goal of less than or equal to 5%. As we can see, the results

for COB subtly decreased from 3.42% to 3.39% which is satisfactory as it is within the range of

excellence. The results of YCU are also satisfactory since they decline from 3.10% to 2.61%.

This means that both institutions are operating efficiently however, YCU is slightly more

effective than COB. Further, the Loan Loss Provision Expense/ Average Asset ratio measures the

cost of losses from risky assets which include delinquent loans and has a goal of being enough to

cover 100% of delinquent loans. For COB, this ratio fell from 0.35% in 2013 to 0.14% in 2017

meanwhile, YCU’s ratio fluctuated from 0.12% to 0.11%. Since the goals of excellence is

dependent upon P1, it can be observed that COB was unable to cover their delinquent loans in

the most recent years while YCU was able to do so in 2016 and 2017. Therefore, YCU has the

more favorable results.

Lastly, the Net Income/Average Assets indicator measures how profitable the credit union

is and the capacity to grow institutional capital. COB’s ratio grew from 0.38% to 0.59% which

according to the goals of excellence of greater than 1%, is not satisfactory. Likewise, YCU’s ratio

is also not satisfactory despite it being 0.18% in 2013 and fluctuating throughout the years.

Therefore, it can be said that the earnings of both institutions are not adequate. In this segment,

COB displayed better results than YCU and generates the higher earnings and returns.

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 Liquidity
The Liquidity indicators (shown below in Table 10) determines how effective the credit

union is in managing its cash which will enable them to meet their member’s demands to

withdraw deposits. Non-Earning Liquid Assets/Total Assets measures the portion of assets which

are invested in non-earning liquid accounts. COB’s results show an increase from 5.31% in 2013

to 7.02% in 2017 which has further departed from the goal of less than 1%. Therefore, COB

should act by investing fewer assets in non-earning liquid accounts. On the contrary, YCU’s

results show a decline from 6.22% to 2.22% therefore, YCU has taken action to reduce the non-

earning liquid assets they are holding. Nevertheless, YCU despite outperforming COB in this

segment, have not met the goal of less than 1%

City of Bridgetown Co-Operative Credit Union

2013 2014 2015 2016 2017
L3. Non-earning Liquid Assets /Total Assets 5.31% 7.99% 6.23% 7.72% 7.02%
Your Credit Union
2013 2014 2015 2016 2017
L3. Non-earning Liquid Assets /Total Assets 6.22% 9.29% 2.45% 1.96% 2.22%
Table 10. The Liquidity Ratios

Signs of Growth
The Signs of Growth indicators measure the growth of the most significant assets,

liabilities and capital of the credit union along with the overall growth of the institution’s

membership. These ratios can be viewed in Table 11 below. The first ratio Growth in Loans to

Members critically analyzes the largest income generator, member loans, and measures the

percentage of growth in the loan portfolio. In COB’s case, the loan portfolio slightly grew from

3.03% in 2013 to 4.72% in 2017. On the other hand, YCU’s loan portfolio drastically grew from

4.61% to 14.52%. According to ILCU (2010), credit unions with very high growth should be

investigated therefore, there is a cause for concern for YCU’s sudden drastic growth.

Nevertheless, since the goal is dependent upon E1. Net Loans/ Total Assets being between 70-

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80%, COB has more satisfactory results. Moreover, the Growth in Financial Investments ratio

measures the growth of the financial investments and has a goal dependent upon E3. Financial

Investments/ Total Assets being less than 2%. COB’s ratios drastically fluctuated during the

years from 71.54% the highest in 2013 to 2.11% the lowest in 2016, as well as YCU’s ratios

which ranged between -5.43% the lowest in 2013 and 9.55% the highest in 2017. Since both

COB and YCU were unable to meet the goal in the Effective Financial Structure segment, they

both have room for improvement.

Moreover, Growth in Savings Deposits measures the year-to-end growth of the savings

deposits. COB’s deposits grew from 8.04% to 8.32% over the years and YCU’s deposits

fluctuated from 10.77% and then grew to 12.34% therefore, it is evident that YCU displayed

more growth. However, since the goal of excellence depends on E5. Savings Deposits/ Total

Assets being within the range of 70-80%, COB’s results are within the range and thus,

outperformed YCU. The Growth in External Credit indicator deals with measuring the

percentage growth of the external borrowings by the credit union and depends on the E6.

Borrowed Funds/ Total Assets falling within the range of 0-5%. COB’s external credit grew from

111.97% to -6.40% over the years and YCU’s own ranged from -100% to 0% over the years

which is due to their infrequent borrowing. Since both institutions have met the goal of

excellence, they both have satisfactory results however, YCU has more favorable results.

Moreover, the Growth in Institutional Capital measures the growth of the capital during

the year. COB’s institutional capital declined over the years from 6.91% to 3.01% as well as

YCU’s capital which fell from 3.56% to 1.39% which may indicate a problem with both of their

earnings. This goal relies on E8. Institutional Capital/ Total Assets being greater or equal to 10%

therefore, COB displayed satisfactory results and outperformed YCU. Lastly, the Growth in Total

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Assets determines the year-to-date growth of total assets. For COB, there was a decline in the

growth in assets from 8.43% in 2013 to 6.63% in 2017 as opposed to the increase that YCU

experienced from 8.53% in 2013 to 13.87% in 2017. Since the results are to be greater than the

inflation rate plus 10%, for COB, the goal should be above 11.8%, 11.77%, 8.89%, 11.28% and

14.99% from the years 2013-2017 respectively and for YCU, the goal should be above 10.93%,

11.92%, 11.13%, 11.41% and 11.6% from the years 2013-2017 respectively. It is evident from

the results that COB has failed to meet the goal and YCU only met the goal in 2017 therefore,

YCU has more satisfactory results in this segment and COB must improve. Therefore, in this

City of Bridgetown Co-Operative Credit Union

2013 2014 2015 2016 2017
S1. Growth in Loans to Members 3.03% 0.37% 2.19% 4.73% 4.72%
S3. Growth in Financial Investments 71.54% 26.05% 30.39% 2.11% 24.16%
S5. Growth in Savings Deposits 8.04% 7.65% 4.68% 9.46% 8.32%
S6. Growth in External Credit 111.97% -8.23% -9.13% -39.77% -6.40%
S8. Growth in Institutional Capital 6.91% 4.26% 1.82% 2.90% 3.01%
S11. Growth in Total Assets 8.43% 5.40% 2.78% 5.55% 6.63%
Your Credit Union
2013 2014 2015 2016 2017
S1. Growth in Loans to Members 4.61% 3.53% 5.56% 6.34% 14.52%
S3. Growth in Financial Investments -5.43% 6.47% -1.83% 2.86% 9.55%
S5. Growth in Savings Deposits 10.77% 7.38% -3.38% 6.16% 12.34%
S6. Growth in External Credit -37.50% -100.00% 0.00% 0.00% 0.00%
S8. Growth in Institutional Capital 3.56% 0.25% 6.03% 2.07% 1.39%
S11. Growth in Total Assets 8.53% 6.93% -2.67% 5.77% 13.87%
overall section, COB has more favorable results.

Table 11. The Signs of Growth Ratios

Conclusion
YCU has more satisfactory results from the PEARLS analysis because they have

surpassed COB in four out of the six segments which included the Protection, Effective Financial

Structure, Asset Quality, and Liquidity indicators. Therefore, it can be noted that YCU’s

members’ deposits are safer and their financial structure is more efficient when compared to

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COB. YCU’s assets are also of a higher quality and they manage their cash and cash equivalents

better than COB as seen in the asset quality and liquidity segments.

However, COB outperformed YCU in two of the six segments which are the Rates of

Return and Costs and the Signs of Growth segments. This show that COB generates higher

returns and their significant accounts have higher growth. Nonetheless, YCU is the leading credit

union overall as it relates to their performance in the PEARLS analysis.

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 Appendix

Bibliography
City of Bridgetown Co-Operative Credit Union Ltd (2017). C.O.B Annual Report 2017.
Retrieved from http://www.cobcreditunion.com/content/downloads

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City of Bridgetown Co-Operative Credit Union Ltd (2016). C.O.B Annual Report 2016.
Retrieved from http://www.cobcreditunion.com/content/downloads
City of Bridgetown Co-Operative Credit Union Ltd (2015). C.O.B Annual Report 2015.
Retrieved from http://www.cobcreditunion.com/content/downloads
City of Bridgetown Co-Operative Credit Union Ltd (2014). C.O.B Annual Report 2014.
Retrieved from http://www.cobcreditunion.com/content/downloads
City of Bridgetown Co-Operative Credit Union Ltd (2013). C.O.B Annual Report 2013.
Retrieved from http://www.cobcreditunion.com/content/downloads
City of Bridgetown Co-Operative Credit Union Ltd (2012). C.O.B Annual Report 2012.
Retrieved from http://www.cobcreditunion.com/content/downloads
COB Credit Union (n.d) Measuring Success One Member at a Time. Retrieved February 2018,
from http://www.cobcreditunion.com/
Evans, E & Branch, B (2002). A Technical Guide to PEARLS A Performance Monitoring System.
World Council of Credit Unions, Inc.

ILCU (The Irish League of Credit Unions) (2010). THE “PEARLS” MONITORING SYSTEM
MANUAL. The Irish League of Credit Unions.

Nicholls, S. (n.d) Financial Soundness Indicators: Presentation to Credit Union Workshop St.
Vincent and the Grenadines. (n.p)
Richardson, D. (2009). PEARLS MONITORING SYSTEM. Wisconsin: The World Council of
Credit Unions.
Your Credit Union (n.d.). Co-operatives mean better business. Retrieved February 26, 2018,
from https://www.yourcu.com/Personal/AboutUs/
Your Credit Union Limited (2017). Financial Statements for 2017. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/
Your Credit Union Limited (2016). Financial Statements for 2016. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/
Your Credit Union Limited (2015). Financial Statements for 2015. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/
Your Credit Union Limited (2014). Financial Statements for 2014. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/
Your Credit Union Limited (2013). Financial Statements for 2013. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/

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Your Credit Union Limited (2012). Financial Statements for 2012. Retrieved from
https://www.yourcu.com/Personal/AboutUs/MediaCenter/CorporateReports/

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