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There are a number of meaningful current stats and figures that have caught my eye. The following is my take on some of them: oCredit unions ended 2006 with ROA of .83%, not a surprise given cost of funds and the overall tight margins present. But it highlights a trend of falling ROA, something NCUA picked up on last year when it said 1.0% is not a magic number for ROA. In a short five years, ROA has dropped from 1.06% to .83%. Fortunately, the credit union model doesn’t necessitate credit unions having to make lots of money each year, but it is still a performance gauge and it is important for credit unions to have the funds to invest in new areas. The falling ROA highlights the need for credit unions to find more streams of non-interest income. A deeper look at ROA also reflects the overall trend of larger CUs outperforming their smaller counterparts. The ROA of CUs with between $20 to $100 million in assets was .67% at year-end, compared to .88% for CUs above $100 million. oNet worth edged up to a lofty 11.5%. The strong capital number highlights the safety and soundness of the system (Congress, risk-based capital is a no-brainer for CUs), but also calls into question whether there are CUs carrying too much capital. Too much capital sounds like an oxymoron, but if a credit union isn’t putting capital to work on growth areas they are taking a different kind of risk. o$145.7 billion!!!! That’s the record number for bank earnings last year. It’s good to be a banker these days, well that is if you’re a big banker. The OTS, which regulates smaller, community institutions, said its 845 thrifts saw a decline in earnings in 2006, going from $16.4 billion in 2005 to $15.9 billion in 2006. Margins among banks declined from 3.52% to 3.31%, and were a mere 2.73% at thrifts. Clearly community banks are feeling some pain, while large mega-banks rake in the profits. o77%. That’s the percentage of banks from a recent Grant Thornton survey that said community banks are their biggest source of competition, after that is regional or mega-banks (68%), with credit unions coming in third at 66%, a 4% drop from last year. In addition, only 26% of bankers were concerned about losing commercial clients to credit unions. If community bankers, which are led by an aggressive anti-credit union trade association in the America’s Community Bankers, were honest they’d come clean that it’s the big banks that are their serious threat, not credit unions. More and more it’s clear that ACB is fighting NCUA on conversions so it can build its member base with converted CUs. Just look at how nicely former Community CU CEO Gary Base has fallen into the ACB fold (picture on page 1). o$10 million. That’s how much the Community Financial Services Associ-ation of America, the primary trade association for payday lenders, is spending on a national advertising campaign to try and clean up the image of payday lenders. I caught one of their commercials over the weekend on CNBC. I thought it was well done. Unfortunately it made payday lenders look great, like they are really trying to help those who can’t get loans elsewhere, and helping them in a responsible manner. While the CFSA only has about 50% of payday lenders as members, the commercial helps all payday lenders. The association says it is spending $8 million on television ads, mostly on national cable stations, and $2 million on regional and national print ads. As I watched the well-done commercial, I couldn’t help think how I wished credit unions could do the same thing. Credit unions could easily raise $10 million for a national cable network ad campaign. o43%. That’s the percentage of respondents to a recent Credit Union Times online poll that questioned whether the IRS’ focus on Unrelated Business Income Tax would cause state charter credit unions to convert to federal charters. That’s a very high percentage, but not surprising given the IRS’ recent Technical Advice Memoranda that ruled some seemingly core CU products, including credit life and disability, fall under UBIT. The UBIT Steering Committee, made up of CUNA, NASCUS, CUNA Mutual, NASCUS and the American Association of CU Leagues, is currently looking for the perfect credit union to sue the IRS. UBIT comes at a bad time. It’s one more thing for the industry to worry about as it deals with conversions and bank attacks. oSpeaking of conversions, it looks like four of them could be in play very shortly. The recent announcement of Utah-based Beehive Credit Union’s intent to convert, combined with Think FCU in Minnesota, makes for two on-the-record conversions. But word from the conversion consultants is that two more CUs have informed their memberships that they are considering converting. Hopefully the industry won’t get numb to these announcements and start to accept a handful of conversions a year as a new reality. –Comments? E-mail [email protected]

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