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RANCHO CUCAMONGA, Calif. – They say it can take anywhere from 10 minutes to an hour to drive to one, depending upon traffic, but that’s not the only difference between California credit unions and those across the country. According to research provided by industry analysts from Callahan & Associates and the California Credit Union League, Golden State credit unions differ in loan portfolio makeup, return on assets, operating expense ratios and state market share. Although California is only one of 50 states, 15.5% of U.S. credit union assets are found here. “If that ratio still holds today, and it probably does, California continues to be a major player in the credit union industry,” said Terrin Mendivil, industry analyst for the California Credit Union League. The state owes much of its asset dominance to the number of large credit unions – there are 23 California credit unions in the $1-billion club. Sacramento-based The Golden 1 Credit Union and Santa Ana-based Orange County Teachers Federal Credit Union lead the pack, at $5.9 billion and $5.6 billion respectively. San Francisco-based Patelco Credit Union comes in third, no slouch at $3.6 billion. Mendivil and Callahan Industry Analyst Tom Geggel both agreed that the number of large credit unions is commendable in California, where the financial services industry is extremely competitive. Mendivil said credit unions not only face competition from each other, but from large banks like Bank of America and Wells Fargo, which may no longer be officially headquartered in California, but still maintain a strong presence here. Of course, part of the secret to California’s success is there is plenty of business to go around. According to the state government’s Web site, California boasts the fifth largest economy in the world. That ranking is based on gross domestic product data from the World Bank’s 2001 figures, where California produced an amazing $1.4 trillion. Additionally, California’s large population contributes plenty of potential members from which to grow. The state government estimated California’s 2004 population to be more than 36 million, gaining more than half a million new residents each year. Size does matter, but there are also differences in financials that contribute to California credit unions’ success and growth. One notable difference is a .99% average return on assets, six points higher than the national average. Geggel attributes this difference, at least partially, to strong loan growth in California fueled by increases in real estate values the past few years. California credit unions carry large 1st mortgage portfolios compared to the rest of the country . nearly triple the nationwide average . at 38.4% of total loan portfolio dollars. Those high numbers may suggest California credit unions fund more mortgage loans than the rest of the country, but closer evaluation reveals that home values make up the difference. When comparing the number of loans instead of dollars, only 2.85% of loans in California are 1st mortgages, compared to 3.2% nationwide. “Certainly, that would signify that the average home value is much more expensive,” Geggel said. Certainly, it is. According to the California Association of Realtors, the median price of an existing, single-family detached home in California during September 2005 was $545,980. The National Association of Realtors reports the nationwide median price was $212,000 during the same period. When faced with the choice of funding a $545,980 loan or a $212,000 loan, even with California’s higher labor costs, most CEOs would choose the former. Which raises another interesting difference: lower operating expenses per assets. Considering California’s higher property values, higher wages and higher demand for new products and services thanks to higher levels of competition, one would assume operating expenses would also be higher. According to the Callahan figures, that is not the case. California credit unions score a 2.92, while nationally credit unions are at 3.20. Based on those figures, one may assume that California credit unions have fewer employees, perhaps serving members via remote access. Remarkably, this is not the case, as they average 380 members per employee, compared to 392 nationwide. Size, charter type and market share are other categories in which California credit unions differ from others. Texas may claim to corner the market on “bigger is better”, but when it comes to credit unions, California is heavy on large credit unions, and light on small ones. Nationwide, 31% of all credit unions have fewer than $5 million in assets. California has fewer than half of that, with only 14.3% below $5 million. California lags behind the nation in the percentage of small credit unions until the $100 million mark. As assets rise, the size gap increases until it claims four times the percentage of billion dollar-plus institutions than nationwide figures. The size of state chartered credit unions is also significant in the Golden State. Numerically, only 37% of the state’s credit unions are either state chartered or privately insured, compared to nearly 40% nationwide. However, state chartered California credit unions claim about 20% of all state chartered assets in the country, Geggel said. Sixteen of the state’s 23 billion dollar-plus credit unions are state chartered, including four of the top five. Despite the forementioned competition among financial institutions in the state, California credit unions have captured twice the market share as the national average, according to Callahan’s research, with 11.5% statewide to a national 6% market share. That success is at least partially the result of innovation among credit unions, Mendivil said. The League analyst also credited California’s demographic diversity as another reason for innovation. “When you consider our population size and the economic issues we deal with . we have a large and diverse economy with high tech industries, entertainment and major farm producers, to name a few . as well as all the diverse backgrounds and cultures, it’s no wonder we have innovation happening overall among our credit unions,” Mendivil said, adding, “our credit unions have to be innovative to meet the changing needs of California.” Mendivil said California credit unions are also on the cutting edge when it comes to political activities, citing her League’s recent public advocacy campaign as an example. “Our lawmakers often lead the rest of the country with innovative policy, and sometimes it provides us with some foresight into where the industry is and where it’s going,” Mendivil said. “California has been a leader for some time in the industry, and assisting our credit unions in that regard is just something the league has always done and continues to do,” she said. 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