Key Performance Indicators to Watch for Financial Institutions Organizations use Key Performance Indicators (KPIs) to evaluate success of particular activities in which it is engaged. Success can be defined as making progress toward strategic goals or the repeated achievement of a particular operational goal. Choosing the right KPIs for your organization is critical to assess the present state of the business, and its key activities. These assessments often lead to the identification of potential improvements and can lead to performance improvement’ initiatives. KPIs may be different for every organization and industry depending upon strategic organizational goals. However, for the financial industry there are a number of important KPIs to track and monitor. These include: • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Adjusted Reserve to Adjusted Loans Commercial Real Estate Loans to Risk based Capital Construction & Land Development to Risk based Capital Core deposits to total deposits Cost of Funds Delinquent loans/Total Loans Fees and other operating income/Average Assets Investment growth Loan growth Loans to assets Loans to deposits Loans to Equity Long-term assets to total assets Market share growth Customer/Membership growth Net interest margin/rate Net Non-core Funding dependence Net operating expenses/Average Assets Net worth growth Non-maturing deposits to Long Term Assets Percentage of change in portfolio mix Portfolio mix Reliance on wholesale funding Residential Real Estate Loans to Total Assets Return on average Assets Return on average equity Yield on average investments Yield on average loans Yield on Loans and Leases
If you or your organization isn’t tracking and monitoring these KPIs, it may be time to evaluate your risk management processes and tools.
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