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WEST PALM BEACH, Fla. – Was ’04 a good, mediocre, or bad year for corporates? And what does ’05 have in store? It depends who you ask but the corporate CU mantra has always been that the network merely ebbs and flows based on what natural person credit unions have done. However, with corporates becoming more diverse with products and more sophisticated on the investment side, performance can vary more than ever from corporate to corporate. One thing all agree on, spreads were tight. “We’ve felt the squeeze. With assets coming down, spread not available to deliver the same high rates and services, so it had to come out of our pockets. Our RUDE accumulation is definitely down,” said Empire Corporate President/CEO Joe Herbst. Herbst said fortunately Empire was able to keep RUDE strong last year even through the great asset balloon of 2003, which helped it maintain competitive rates in ’04. “We didn’t even come close to regulatory concerns,” he said. Even so Herbst is a big proponent of risk-based capital so corporates aren’t just relying on RUDE, and so corporates’ risk profile is more accurately measured. Herbst said Empire plans to stay short with its balance sheet. Its managed to keep its assets about even at $4.5 billion this September, exactly where it was last September. WesCorp says good ALM planning helped it turn ’04 into a winner. At $24.8 billion at the end of November, its assets are up about a billion dollars over last year. However, member shares were down by about a billion. “A billion dollars on a $25 billion balance sheet is not a huge change,” said WesCorp CFO Todd Lane. Lane said assets didn’t drop like they did at many other corporates because about 65% of its members’ deposits are term deposits, as opposed to most other corporates where 65 to 70% of member deposits are in overnight funds, which are more liquid. “We actually had a fantastic year in terms of margins. When you look at our ROA in `04 vs `03 we were up six basis points. That’s driven by our net interest margin going up. We managed to make some correct ALM choices at the right time. A lot of it is good timing and understanding where the market is going,” said Lane. The new financial whiz at SunCorp, SVP and Chief Investment Officer Marc Schieffer, said corporates had to battle pockets of deposit outflows in ’04 as credit union lending picked up. Schieffer joined SunCorp only recently, having come from EasCorp’s ALM First Financial Advisors. Prior to that he was with Southwest Corporate, and prior to that PacCorp. He said a big goal of SunCorp’s next year is to move off balance sheet where it can. “Liquidity has struggled in this Rocky Mountain/Plain States Regions. I know we have between $100 and $150 million in loans outstanding, there are not a lot of folks out there to invest.” But liquidity has picked up at the end of the year at SunCorp. “We had the biggest average balance growth in the month of October in nine years, and November was pretty solid as well,” said Schieffer. The balances grew by $75 million in October (which had five Fridays) and $50 million in November. He said CUs are probably not sure what to do with cash at this point. “Liquidity has been tight for so long, they’re hesitant to commit those monies. The first quarter should see a pretty significant influx of funds,” he said. Schieffer said there’s not much incentive to go out long on the yield curve just yet. “There is value to be had in the one-year. A lot of Fed tightening is firmly priced into the market. Anything outside of a year and a half and we don’t view the risk-reward metrics as worth it. Don’t fight Greenspan. He said a couple of weeks ago if you’re not positioned for higher rates you’re asking for trouble. We see Fed Funds at 4% by the end of next year,” said Schieffer. Lane believes ’05 will be a flat year. “Rates will continue to rise throughout 2005. We don’t see where WesCorp will have a significant increase in our bottomline that we saw in 2004. We think deposit growth at WesCorp and credit unions is not going to be quite as significant either. We’re projecting a flat balance sheet,” said Lane. [email protected]

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