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WASHINGTON – At first glance the top 100 credit unions have a lot in common. For one thing, all but 17 have at least $1 million in assets. But beyond their similarities lies deeper, perhaps unexpected, diversities For example, while data from Callahan and Associates shows the average loan growth for the top 100 CUs was 14.01% as of December 2003, 11 of these CUs had a negative loan growth for that period: Kinecta CU, -2.76%; Delta Employees CU, -4.09%; Addison Avenue FCU, -1.73%; Tinker FCU, -0.20; Arizona FCU, -2.64%; Technology CU, -4.91%; Connecticut State Employees CU, -10.05%; Washington State Employees CU, -11.95%; California CU, -7.55%; Dow Chemical Employees CU, -12.40%; and Arizona State Savings and CU, -4.48%. In addition, the average dollar volume of the loan portfolio for the top 100 CUs was $1,245.9 billion, but 11 of them had less than $500 million in loans as of December 2003, and another 49 had between $1 billion and $500 million in loans. Likewise the average return-on-assets for these 100 credit unions was 1.15%, but 33 of the credit unions have ROAs of less than 1%. “This group of credit unions is a leading group in almost any measure – growth, return to members, and in terms of new product development. There’s no denying this is a group of leaders that have the resources to offer their members a broader array of products and services than smaller credit unions,” says Callahan & Associates Executive Vice President Jay Johnson. “But there is still a lot of diversity among the groups, as is the case with the entire credit union industry. Overall this is a very healthy group, but you will see variations in their performance and strategies.” Johnson points out that although it might be expected that any of the top 100 credit unions would show a relatively strong long growth or ROA, “there could be some business decision by a credit union that explains why they have a lower return on assets or loan growth. You will always see some extremes on both ends.” He also noted that the low or negative loan growth could be indicative of the slow down in mortgage lending towards the end of 2003 and that credit unions were encouraged to sell their mortgages on the secondary market. Geographic factors also have to be considered, as well as macro economic factors that impact members’ borrowing decisions. As to comments banks have made about credit unions’ growth and their practice of pointing to the largest credit unions and citing their loan and asset growth, Johnson asked rhetorically, “Since when is growth a bad thing? Certainly no bank would say it didn’t want to grow, and even among the largest banks there will be variation in performance.” He added that, “I find it ironic when community banks talk about how credit unions’ share of the market has grown. Banks have expanded their market share more than credit unions have. What’s more, in 2003 there was only one really big merger among credit unions, between TRW Systems FCU and Western FCU. When you look at the bank market, their growth has been driven by mergers, whereas credit unions’ growth is driven primarily by current members who continue to use their credit unions’ products and services. That’s indicative of the strength of this group of top 100 credit unions. Considering the slowdown in membership growth, that makes these numbers even more outstanding because it shows that members recognize the value that credit union services bring.” -

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