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WASHINGTON-No sooner had it been announced that a group of some of the top credit union economists had formed the Credit Union Economics Group than they met with Federal Reserve Board Governor Mark Olson. In the data presented to the Fed, CUEG stated that 2002 loan growth for all federally insured credit unions was 6.3%, lead by first mortgages. Federally insured credit unions’ 2002 share growth reached double digits again at 10.8% “with growth in every region being concentrated in non-share certificates, particularly regular and money market shares. IRA accounts were also a noticeable safe haven for credit union members’ principal last year.” Speaking with reporters last week, some members of the group said that credit unions should be prepared for more of the same. Scott Mainwaring, Vystar Credit Union EVP and CFO, said CUEG expects savings growth to be up around 9% in the most likely scenario, but if uncertainty in international affairs persists that number could shoot back into the double digits. Mainwaring said lending growth will most likely hit 6.5% in 2003, but if problems linger, it could go as low as 4%. CUEG Member Dave Colby, CUNA Mutual assistant vice president and corporate economist, said he expects mortgage rates could rise 100 to 150 basis points over the next 18 to 24 months. He added that auto loans could bounce back a little more given the current 0.0% offers, up about 200 basis points in the same period. According to Colby, the last time the loan-to-share ratio was this low was November 1994, but with weak lending and money continuing to flow in, it could stay like this for awhile, noting “4.2% year-to-date share growth for two months is one heck of a rate coming into the credit union,” he quipped. He emphasized the credit union pricing can change the flow of deposits into the credit union. NAFCU Chief Economist Tun Wai said that credit unions manage their books well. He pointed out that credit unions’ Return on Assets was up last year to 1.07%, after sliding off in 2001. Even with slow-or no-lending growth, credit unions are not rushing out to make poor credit decisions; Wai said that delinquencies and charge-offs are still very low, though up slightly. About half of charge-offs are due to bankruptcies, which has also held steady, he said. The formation of CUEG was announced at the beginning of April. The members of the nonprofit group volunteer their time to provide strategic economic forecasting services for smaller credit unions that cannot afford economists. The group plans to report to the Fed or one of its district banks every six months. [email protected]

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