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Profitability of credit unions, commercial banks and savings banks: a comparative analysis.



I. Introduction

The liberalization lib·er·al·ize  
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es

v.tr.
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . .
 of product and price competition among depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box.  intermediaries in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  has tended to make them more similar since enactment of the Depository Institutions Deregulation and Monetary Control Act Depository Institutions Deregulation and Monetary Control Act

The 1980 federal legislation that ended the regulation of the banking industry.
 in 1980 (DIDMCA DIDMCA Depository Institutions Deregulation and Monetary Control Act ). Commercial banks, savings banks savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest.  and credit unions compete against one another even as they remain different deposit taking institutions under the law. Regulation, in an environment of changing laws relating to relating to relate prepconcernant

relating to relate prepbezüglich +gen, mit Bezug auf +acc 
 financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page.
, applicable to these institutions has moved in favor of upon the side of; favorable to; for the advantage of.

See also: favor
 taking advantage of economic forces and laws allowing them to enter one another's traditional areas of business while continuing to offer their specialized spe·cial·ize  
v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es

v.intr.
1. To pursue a special activity, occupation, or field of study.

2.
 services to the public. It is important to assess the performance of depository institutions Depository institution

A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions.
 in the new market process. Credit unions have expanded their loan portfolios and deposit categories only in the consumer marketplace. In contrast, commercial banks, with broader authority, have made significant inroads inroads
Noun, pl

make inroads into to start affecting or reducing: my gambling has made great inroads into my savings

inroads npl to make inroads into [+
 in real estate lending, corporate financing and the transactions side of financial services. Savings banks, likewise, have expanded their products and services while losing a part of their portfolio and market share to the other two institutions.

The focus of this study is on a comparison of the performance of credit unions, commercial banks and savings banks in the deregulatory environment of the 1980's. Profitability is the measure of both performance of each of the industries and the degree of competition among them. This approach follows the on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis"
ongoing

current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position"
 study of profitability of the commercial banking industry during the past four years by the Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System

The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply.
. Whereas the Federal Reserve analyzed an·a·lyze  
tr.v. an·a·lyzed, an·a·lyz·ing, an·a·lyz·es
1. To examine methodically by separating into parts and studying their interrelations.

2. Chemistry To make a chemical analysis of.

3.
 performance of commercial banks only, this study presents a comparative analysis of profitability of credit unions, commercial banks and savings banks.

II. Methodology

The methodology used in this paper is similar to the Federal Reserve studies of commercial banking profitability in each of the four years since 1989. The structure of those studies is used as a model for this study. Profitability results of commercial banks, using income statement and balance sheet data, are compared with those of credit unions and savings banks.

Data representing the financial performance of credit unions have been generated from National Credit Union Association (NCUA NCUA National Credit Union Administration (US government)
NCUA Nbcs Control Unit Atm
) annual reports. Information is presented in two major categories, Federally Chartered/Federally Insured credit unions and State Chartered/ Federally Insured credit unions. These two groups, representing over 90 percent of operating credit unions and over 90 percent of total industry assets, were combined into composite balance sheets and income statements and used as a proxy for the entire industry.

Data for the commercial banking industry comes from the Flow of Funds Statements flow of funds statement

1. For municipal bond issues, a listing of priorities for municipal revenues, including the relative position of debt service and sinking fund requirements.

2. See statement of cash flows.
 of the Federal Reserve. Specifically, information is provided covering "all insured domestic commercial banks and non-deposit trust companies." Data on insured savings banks are from the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. .

It is hypothesized that credit unions, although only one-twelfth Noun 1. one-twelfth - one part in twelve equal parts
duodecimal, twelfth part, twelfth

common fraction, simple fraction - the quotient of two integers
 their size, are at least as profit able as commercial banks and savings banks. A joint hypothesis is that, on average, a large commercial bank is not more profitable than the average credit union or a medium size savings bank.

III. A Comparative Analysis of Profitability

Consolidation among depository institutions has been a major trend in the financial services industry over the last decade. The number of commercial banks has declined by over 20 percent since 1980, while credit unions contracted by over 25 percent.(1) Even greater decline of over 30 percent were observed in the savings and loan savings and loan n. a banking and lending institution, chartered either by a state or the Federal government. Savings and loans only make loans secured by real property from deposits, upon which they pay interest slightly higher than that paid by most banks.  industry. These results reflect both the economic environment of increased competition in financial services as well as problems more specific to each of the industries as they reallocate Verb 1. reallocate - allocate, distribute, or apportion anew; "Congressional seats are reapportioned on the basis of census data"
reapportion

allocate, apportion - distribute according to a plan or set apart for a special purpose; "I am allocating a loaf of
 their asset and liability portfolios in response to changing market conditions.

It is hypothesized here that, ex ante, a more open and competitive environment would lead to profit maximizing portfolio shifts in the balance sheets of competing depository institutions. This process would move these industries towards a long-run adj. 1. relating to or extending over a relatively long time; as, the long-run significance of the elections s>.

Adj. 1. long-run
 equilibrium equilibrium, state of balance. When a body or a system is in equilibrium, there is no net tendency to change. In mechanics, equilibrium has to do with the forces acting on a body.  position of similar asset and liability structures, within the limits of regulatory standards. The price competition element of the process would lead to similar returns in equilibrium. In an ongoing process of short-run Adj. 1. short-run - relating to or extending over a limited period; "short-run planning"; "a short-term lease"; "short-term credit"
short-term

short - primarily temporal sense; indicating or being or seeming to be limited in duration; "a short life"; "a
 equilibria, however, the markets would produce different returns on assets. These short-run returns, of course, would result in portfolio adjustments towards long-run equilibrium positions.

The process of price and product competition was an important factor in bringing about deregulation Deregulation

The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.

Notes:
Traditional areas that have been deregulated are the telephone and airline industries.
 of the financial services industry and liberalization of their activities in the 1970s and 1980s. Deregulation and liberalization of banking markets have in turn strengthened the competitive environment. The markets and the U.S. Congress are ready for another round of liberalization in the 1990s following the case-by-case Adj. 1. case-by-case - separate and distinct from others of the same kind; "mark the individual pages"; "on a case-by-case basis"
item-by-item, individual
 approach of the Federal Reserve in recent years.(2)

The Federal Reserve itself is not only quite aware of the impact of this churning Firing one group of employees and hiring another. As companies move into newer, high-tech ventures, they often eliminate employees with older skills while bringing on new people who have computer programming, networking and Web experience.  of bank portfolios, it actually researches its impact on the commercial banking industry. Before 1986, when price and product competition became fully operational under DIDMCA(3) and the Depository Institutions Act of 1982 (the Garn-St. Germain Ger`main´

a. 1. See Germane.
 Act)(4), the Federal Reserve studied profitability of commercial banks every few years. In recent years, however, these studies are performed every year to stay abreast of the successes and trouble spots in a highly charged competitive environment. This is in part due to Federal Reserve sensitivity to what happened to the savings bank industry following DIDMCA and Garn-St. Germain.

One of the key goals of the Federal Reserve is clearly the maintenance of safety and soundness of the nation's banking system. Formally, the Federal Reserve, since DIDMCA, has widened its responsibility to other depository institutions due to application of its reserve requirements Reserve Requirements

Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank.
 on deposit liabilities of commercial and savings banks. The National Credit Union Association (NCUA) has responsibility for credit union industry activities in this regard.

These profitability studies are, therefore, important indicators of shifts in commercial bank portfolios in the new competitive environment. This paper takes that structure as a beginning premise to ask the following questions: What is the impact of the new environment on other depository institutions, specifically credit unions and insured savings banks, as they compete with commercial banks? What are the shifts in their balance sheets? What is the impact on their profitability in relation to commercial banks? To answer these questions, we have made calculations, similar to the Federal Reserve studies, for the credit union and the savings banking industries. These calculations, using Federal Reserve definitions, where applicable, are then used to compare the three industries with respect to their bottom line impact, i.e. profitability.

Income Statement and Profitability

In Table 1, data are presented for selected income and expense items of these three industry segments for the last four years. They show different trends over the period, but also some interesting similarities which may reflect the fact that diversification Diversification

A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance.

Notes:
Diversification is possibly the greatest way to reduce the risk.
 is blurring many of the distinctions between these institutions.
TABLE 1
Selected Income And Expense Items: 1989-92 (1)

Percent                                Credit Unions
Item                            1989    1990    1991    1992

New interest margin             3.92    3.862   3.776   3.892
Net non-interest margin        -2.589  -2.54   -2.44   -2.88
Loss Provisions                 0.444   0.482   0.442   0.347
Securities Gain-                0.001   0.002   0.017   0.028
Income before taxes             0.886   0.842   0.911   1.293
Taxes and extraordinary ite     N.A.    N.A.    N.A.    N.A.
Net income                      0.886   0.842   0.911   1.293
Dividends(*)                    0.227   0.172   0.118   0.144
Retained income                 0.659   0.67    0.793   1.149

Percent                            U.S. Commercial Banks
Item                            1989     1990    1991   1992

New interest margin             3.53     3.46    3.61    3.9
Net non-interest margin        -1.8     -1.82   -1.93   -1.92
Loss Provisions                 0.98    0.96     1.02    0.77
Securities Gain                 0.03    0.01     0.09    0.12
Income before taxes             0.78    0.7      0.75    1.33
Taxes and extraordinary ite     0.31    0.26     0.27    0.43
Net income                      0.49    0.49     0.53    0.92
Dividends(*)                    0.44    0.42     0.43    0.42
Retained income                 0.04    0.07     0.1     0.51

Percent                         Insured Savings Institutions
Item                            1989   1990      1991   1992

New interest margin             1.68    2.03     2.49    3.07
Net non-interest margin        -1.34   -1.59    -1.62   -1.64
Loss Provisions                 0.73    0.73     0.64    0.49
Securities Gain                 0.09    0.01     0.09    0.07
Income before taxes             0.39   -0.29     0.22    0.93
Taxes and extraordinary ite     0.09    0.11     0.27    0.4
Net income                     -0.38   -0.38     0.08    0.66
Dividends(*)                    0.11    0.1      0.16    0.2
Retained income                -0.49   -0.48    -0.08    0.46


(1.) As a percentage of average net consolidated assets.

N.A.: Not applicable.

(*) For Credit Unions-Net Transfer to Statutory Reserve.

Source: Annual Report, National Credit Union Administration The National Credit Union Administration (NCUA) is responsible for chartering, insuring, supervising, and examining federal credit unions (FCUs) and for administering the National Credit Union Share Insurance Fund. , 1989-1992 "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July July: see month.  1993. Federal Deposit Insurance Corporation Statistics on Banking, 1992.

Both commercial banks and insured savings institutions made significant progress in increasing profitability over the last few years. Major restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics).  has taken place in commercial bank balance sheets since 1990, with investment portfolios increasing in both absolute and relative size. To a lesser extent this has been the pattern observed in the insured savings institutions, except that they have experienced absolute declines in loan portfolios (primarily real estate loans), as well as an overall contraction contraction, in physics
contraction, in physics: see expansion.
contraction, in grammar
contraction, in writing: see abbreviation.

contraction - reduction
 in assets.

For credit unions, both loan and investment portfolios have expanded since 1989. However, holdings of securities have expanded significantly faster than loan volume, resulting in the lowest loan/asset and loan/share ratios in more than a quarter century. In fact, it would be difficult to find a period of time when the asset structure of the industry looked anything like it does today! Credit unions have been more successful at attracting member deposits (savings) than at making loans in an increasing competitive environment.

With respect to the operating performance of these industry segments, the net interest margin of credit unions has been quite stable since 1989, with a slight downward trend (Table 1). In contrast, commercial banks have seen their margins grow fairly steadily. By 1992 commercial banks' net interest margins reached the level of the credit union industry, i.e. 3.9 percent. For the insured savings institutions, recovery of interest margins has been even more dramatic, expanding from 1.68 percent in 1989 to 3.07 percent in 1992. Savings banks have made significant financial progress in recent years but still are about 0.8 percentage points lower than credit unions and commercial banks (Figure 1). Price competition seems to be working across industries and size of firms as would be expected under DIDMCA, especially since 1986 when Regulation Q of the Federal Reserve concerning interest rate ceilings on deposits was fully phased-out.

All three industries have negative non-interest margins.(5) Credit unions have a much higher negative position when compared to either commercial banks or insured savings institutions. For most years credit unions' non-interest margins exceed those of commercial and savings banks by 0.5 to 1.2 percentage points. These margins (for credit unions) include subsidies in the form of some type of "sponsor support" which has the effect of keeping operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted.
 lower than for their competitors. The higher negative noninterest margin for credit unions is indicative of a much smaller percentage of their income being generated from fees and miscellaneous services. Commercial banks have been especially successful at generating and growing fee income. In contrast, the cooperative philosophy of the credit union industry results in lower fees collected for specific services and less fees collected in total. Savings banks, likewise, have more diversified diversified (di·verˑ·s  sources of income than credit unions, although not nearly as extensive as commercial banks.

Loss provisions for all the institutions have been trending downward over the period under study. However, the level for credit unions has been less than one-half that of commercial banks and about two-thirds of the insured savings institutions. The more restricted member oriented o·ri·ent  
n.
1. Orient The countries of Asia, especially of eastern Asia.

2.
a. The luster characteristic of a pearl of high quality.

b. A pearl having exceptional luster.

3.
 consumer loans of the industry, coupled with its more conservative lending philosophy, have contributed to this pattern of performance. Credit unions have had a better record of making "good" loans and/or and/or  
conj.
Used to indicate that either or both of the items connected by it are involved.

Usage Note: And/or is widely used in legal and business writing.
 "loan workouts" when members experience financial difficulty than either of their "for-profit for-prof·it
adj.
Established or operated with the intention of making a profit: a for-profit organization. 
" competitors.

Income before taxes shows how these industry segments are similar and getting even more so over time. Credit unions generated consistently higher income margins over their competitors up to 1992 when commercial banks moved slightly ahead (1.33 percent vs. 1.29 percent). While the insured savings institutions are doing much better than even a few years ago, they only reached 0.93 percent in 1992.

Net income after taxes and extraordinary items show significant differences between the three groups. Since credit unions are owned by their members, they are not subject to income taxes (either accrued ac·crue  
v. ac·crued, ac·cru·ing, ac·crues

v.intr.
1. To come to one as a gain, addition, or increment: interest accruing in my savings account.

2.
 or actually paid in a given year). Therefore, their margins are not affected by tax rates and remain unchanged from the comparison above.

The year 1992 was an extremely profitable year for commercial banks, with profits exceeding $31 billion, for an average return on assets Return on assets (ROA)

Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets).
 of a record 0.92 percent; it compares to 1.29 percent for the credit union industry and 0.66 percent for insured savings institutions.

Commercial banks and savings institutions now pay out cash to their owners in the form of dividends. In contrast, credit unions, by law, must make a "net transfer to statutory reserves" based on their margins and the risk complexion complexion /com·plex·ion/ (kom-plek´shun) the color and appearance of the skin of the face.

com·plex·ion
n.
The natural color, texture, and appearance of the skin, especially of the face.
 of their asset portfolios. These transfers have averaged only about one-third of the commercial bank dividends and about one-half of savings institutions' dividend payments.

The "bottom line" of this analysis is retained earnings Retained Earnings

The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet.
, added to the capital accounts of each financial institution, as a reserve for future losses. Credit unions have been much more consistent at generating retained earnings and much more successful with respect to the level of retained earnings. Retained earnings have generally been more than double that of either commercial banks or savings institutions, although the latter groups are trending upward at a much more rapid rate in recent years.

Balance Sheet Developments

Growth and shifts in various balance sheet items for credit unions and commercial banks are presented in Table 2. Credit union asset growth has been significantly higher than commercial banks' since 1985. When comparisons are made it must be mentioned that the credit union industry, with $250 billion in assets at year end 1992, is quite a bit smaller than the commercial banking industry, at $3,500 billion.

TABLE 2 Annual Rate of Growth of Balance Sheet Items: 1985-92 (1)

Percent                                Credit Unions
                 Item                       1985     1986     1987     1988

Total Assets                28.96    23.40    9.80     8.10
Interest Earning Assets     28.92    23.39    9.91     8.09
Loans                       19.82    15.67   15.58    14.25
Real Estate                 58.26   216.00   46.08    28.28
Consumer                    17.40    -1.36    7.28     9.05
Securities                  50.26    37.84    1.00    -2.96
Non-Interest Earning
 Assets                     29.52    23.22    7.30     8.26
Total Liabilities           29.16    23.74    9.40     7.74
Deposits                    30.00    24.21    9.10     7.56
Foreign                     NA       NA       NA       NA
Domestic                    30.00    24.21    9.10     7.56
Demand                      35.15    26.08   13.31     5.58
Other Checkable             NA       NA       NA       NA
Savings                     29.51    24.02    8.67     7.77
Subordinated Notes
and De                      -2.68    4.27    22.42    12.17
Other                       NA  NA   NA       NA      NA
Equity Capital              23.35   17.59    15.99    15.33
Loss Provisions             54.24   63.98    26.24    13.11

Percent
Item                        1989       1990     1991    1992

Total Assets                4.78        7.90    14.56   13.79
Interest Earning Assets     4.46        8.10    14.64   13.75
Loans                       7.73        3.52     4.58    4.48
Real Estate                16.03        8.90     7.78    5.28
Consumer                    4.11        0.90     2.90    4.04
Securities                 -2.46       18.79    35.10   23.34
Non-Interest Earning
 Assets                    10.83        4.48    13.22   14.54
Total Liabilities           4.22        7.65    14.45   13.27
Deposits                    4.71        7.66    14.34   13.23
Foreign                     NA          NA      NA      NA
Domestic                    4.71        7.66    14.34   13.23
Demand                      8.05        7.43    14.32   22.68
Other Checkable             NA          NA      NA
Savings                     4.37        7.68    14.35   12.21
Subordinated Notes
and De                     -4.19        7.85    19.33   15.56
Other                       NA          NA      NA
Equity Capital             12.58        11.31   11.54   19.99
Loss Provisions            15.64        17.31   5.03   -10.81

Percent                            U.S. Commercial Banks
Item                            1985    1986   1987   1988   1989

Total Assets                    8.90    7.60   2.00   4.40   5.40
Interest Earning Assets         9.70    8.00   3.90   3.90   5.80
Loans                           7.90    7.50   4.10   5.70   6.50
Real Estate                     13.70   17.60 16.60  12.60  12.90
Consumer                        15.80    8.60  4.60   7.70   6.30
Securities                      14.00   10.30  7.50   3.00   4.10
Non-Interest Earning
 Assets                          3.60    5.30 -11.10  8.40   2.40
Total Liabilities                8.80    7.60   2.20  4.10   5.50
Deposits                         7.90    7.80   2.30  4.10   4.80
Foreign                          1.90    6.00 -25.90 -7.60  -0.30
Domestic                         9.70    8.40  10.10  6.30   5.70
Demand                           8.90    13.20-10.80  0.60   0.40
Other Checkable                  17.80   32.80  7.80  7.60   2.50
Savings                          23.90   13.60 39.90  1.10   0.50
Subordinated Notes
and De                           42.30   16.30  3.80  2.40  14.90
Other                            12.70    6.40  1.50  4.30   8.60
Equity Capital                    9.80    7.50 -0.70  8.90   4.20
Loss Provisions                 24.50    24.40 72.80 -6.50  15.30

Percent
Item                            1990   1991   1992

Total Assets                    2.70   1.30   2.30
Interest Earning Assets         2.30   2.00   2.50
Loans                           2.30   2.60  -1.10
Real Estate                     8.80   2.80   2.00
Consumer                        0.50  -2.50  -1.50
Securities                      8.30  14.40  11.50
Non-Interest Earning
 Assets                         5.70  -3.50  -0.10
Total Liabilities               2.40   1.00   1.40
Deposits                        3.90   1.60   0.40
Foreign                        -4.90   4.00  -4.30
Domestic                        5.20   1.30   1.10
Demand                          0.70  -2.00  12.60
Other Checkable                 6.40  14.80  18.60
Savings                         6.50  14.40  13.10
Subordinated Notes
and De                         23.10   3.80  33.20
Other                          -5.30  -2.00   5.30
Equity Capital                  6.90   5.80  13.80
Loss Provisions                 3.00  -0.30  -1.00



(1.) From year end to year end.

NA: Not applicable.

(*) For Credit Unions-Non-Interest Bearing Liabilities.

Source: Annual Report, National Credit Union Administration, 1985-1992. "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993.

Although credit union loan growth rates Growth Rates

The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures.

Notes:
Remember, historically high growth rates don't always mean a high rate of growth looking into the future.
 have been consistently more than double the levels for commercial banks, a slowdown For articles with similar titles, see Slow Down (disambiguation).
A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties.
 in loan demand has been experienced by both institutions. From growth rates approaching 20 percent in 1985, credit union levels have declined to the 3.5-4.5 percent range since 1990. For commercial banks the growth rate declined from about 8 percent in 1985 to just over 2 percent in 1990. For 1991 and 1992 their loan growth rates were actually negative, as the slow growing economy and competition from bank and non-bank lenders actually resulted in a small contraction of loan portfolios in each of those years.

Credit union and commercial bank loan portfolios are converging con·verge  
v. con·verged, con·verg·ing, con·verg·es

v.intr.
1.
a. To tend toward or approach an intersecting point: lines that converge.

b.
 in the real estate and consumer financing categories as was anticipated by the Depository Institutions Act of 1982 (Garn-St. Germain Act). These data are presented in Table 2. Both institutions have experienced rapid, but declining growth in their real estate portfolios. Credit union growth rates have been double or triple commercial bank growth rates in the period. Credit union real estate loans are primarily of the home equity and variable rate variety, while commercial bank loans also extend into the commercial end of the marketplace. Specific credit unions may be more vulnerable to regional weakness in the real estate area, or weakness due to problems at a sponsor (defense bases closings). However, many have managed these loans quite successfully, in terms of volume, liquidity, and saleability (first mortgage) in the secondary markets to reduce risks to their own portfolios.

Consumer loan growth has lagged real estate growth for both credit unions and commercial banks since 1985, although the differential has narrowed considerably in the last few years. Credit unions have been more successful at growing their consumer loan portfolios. From double digit Noun 1. double digit - a two-digit integer; from 10 to 99
integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction"
 growth in 1985, credit unions expanded these loans by just 4 percent in 1992. Commercial banks experienced declines from almost the same levels of 2.5 percent in 1991 and 1.5 percent in 1992.

Real estate has been the smallest component of credit union loan portfolios and it was due primarily to caution on the part of members (consumers) in taking on new debt in the face of uncertainty in economic growth and instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability.

detrusor instability
 in the job market outlook. In contrast, it could be argued that part of the slowdown at commercial banks was due to a policy of restructuring lending in order to enhance capital ratios.

Credit union loan portfolios have been lengthening lengthening (lengkˑ·the·ning),
n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue.
, due to the expansion of real estate assets on their balance sheets. At the same time securities portfolios have expanded rapidly with the net result being a reduction in the overall average asset maturity of the industry. Even as these trends develop, the overwhelming short term maturity structure of credit union liabilities is cause for concern. These increased risk levels probably require the higher and growing capital ratios being generated by the industry in recent years and the regulatory pressures from the NCUA to continue to foster capital growth in the 1990's.

Both credit unions and commercial banks have seen their securities portfolios grow much more rapidly than loan portfolios in the last 8 years. Credit union growth rates have generally been double those of commercial banks over the period. Both institutions have been more successful at attracting consumer savings when compared to making loans, with the result being increases in investment portfolios. Another incentive for commercial banks was that many of these investments would not be used in calculating certain risk-adjusted capital ratios, due to their lower risk levels. Therefore, banks could continue to attract deposits, build assets and grow their capital at a rate fast enough to increase capital-asset ratios (Figure 2).

On the deposit side of the balance sheet, credit union growth outstripped that of commercial banks by a wide margin. It may also be observed that diversity of deposit categories is greater for commercial banks. Credit unions do not have "foreign deposits" or "other checkable deposits" on their books.

Equity capital growth in both industries declined from 1985 through 1991, with credit unions consistently exceeding commercial banks by more than 100 percent. In 1992, credit union equity growth was almost 20 percent while commercial bank growth was 13.5 percent, it's it's  

1. Contraction of it is.

2. Contraction of it has. See Usage Note at its.


it's it is or it has
it's be ~have
 highest in 8 years.

Growth in loan loss provisions for both industries has trended downward over the last 8 years. Changing market conditions and regulatory pressures have much to do with these patterns of performance as well as specific year-to-year variations. Again, reflecting the strengthening of the economy, both credit unions and commercial banks reduced their loss provisions in 1992.

Over the last few years the yield curve has been especially steep, even as it has shifted downward. Both credit unions and commercial banks have actually increased their holdings of short term securities (maturities of less than one year). This has contributed to a shortening of the average maturity of their portfolios. Credit unions had just over 39 percent of their portfolios in these shorter maturities, significantly higher than the 26.6 percent for commercial banks as of year end 1992.

To highlight the impact and importance of loan activity on the operations of both credit unions and commercial banks, we have produced Table 3. It shows clearly that, since 1990, credit unions have continued to grow their loan portfolios in a slow but consistent manner. This performance has contributed to their higher and growing return on assets when compared to commercial banks.

TABLE 3 Loan Growth and Return on Assets: 1990-92 (1)

Percent                 Credit Unions       U.S. Commercial Banks
Year                1990     1991    1992    1990    1991    1992

Loan Growth         3.52     4.58    4.48    2.3    -2.6     1.1
Return on Assets    0.842    0.911   1.293   0.49    0.53    0.92


(1.) Loan growth calculated from year-end year-end also year·end
n.
The end of a year.

adj.
Occurring or done at the end of the year: a year-end audit.

Noun 1.
 to year-end. Return on Assets in net income as percentage of average net consolidated assets. Source: Annual Report, National Credit Union Administration, 1989-1992. "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993.

In contrast, commercial bank loan growth has been quite inconsistent, with a downward trend over the period. These rates are also about one-quarter to one-half the rates for credit unions. The result of being relatively less successful at growing their loan portfolios has contributed to their significantly lower return on assets-it has been between one-half and two-thirds the level for credit unions in this period.

The liability structure of credit union and commercial bank balance sheets partly reflects the philosophy and operating characteristics of their management teams (Table 4). Almost 95 percent of credit union time deposits have maturities of less than one year, as of the end of 1992, up from 92.3 percent in 1990. In contrast, commercial banks had only 74.7 percent of their time deposits under one year, down from 80.9 percent in 1990.

TABLE 4 Maturity Structure of Selected Assets and Liabilities at Year-end, 1990-92

Percent                             Credit Unions

Account and Maturity Range    1990    1991    1992

Securities
One year or less              37.65   39.36   39.26
More than One year            62.35   60.64   60.74
Total                        100.00  100.00  100.00
Time deposits
One year or less              92.34   93.58   94.17
More than One year             7.66    6.42    5.83
Total                        100.00  100.00  100.00

Percent                       U.S. Commercial Banks

Account and Maturity Range    1990    1991   1992

Securities
One year or less              26.00   26.00   26.60
More than One year            74.00   74.00   73.40
Total                        100.00  100.00  100.00
Time deposits
One year or less              80.90   79.20   74.70
More than One year            19.10   20.80   25.30
Total                         100.00 100.00  100.00



Source: Annual Report, National Credit Union Administration, 1990-1992. "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993.

One manifestation man·i·fes·ta·tion
n.
An indication of the existence, reality, or presence of something, especially an illness.


manifestation
(man´ifestā´sh
 of the higher proportion of short term deposits at credit unions is a lower interest rate paid on these liabilities. These items are also riskier to the credit union because they must have their rates reset more often. If interest rates rise, a larger percentage of these deposits will be reset sooner, costing the credit union in terms of higher interest expenses, ceteris paribus Ceteris Paribus

Latin phrase that translates approximately to "holding other things constant" and is usually rendered in English as "all other things being equal". In economics and finance, the term is used as a shorthand for indicating the effect of one economic variable on
.

Commercial banks have been lengthening their longer term, more expensive time deposit accounts. Therefore, if rates rise they have reduced the interest rate risks associated with higher amounts of long term deposits. However, in a low interest rate environment, with rates relatively stable or rising only modestly, this strategy will have an adverse effect on profit margins vis-a-vis credit unions.

Loan Quality

Financial intermediaries Financial intermediaries

institution that provide the market function of matching borrowers and lenders or traders.
 are affected by a number of forces. Some are external to the organization, such as trends and patterns of interest rates and the strength of the economy. Others are internal, reflecting managerial capabilities and the effectiveness of operating policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental . Table 5 presents a number of measures of loan quality for both credit unions and commercial banks in the 1990's (over the 3 years). Loss provisions represent the reserves set aside for potential problems. Commercial banks generally have reserve provisions that are more than double those of the credit union industry. A major portion of the differential is a function of the composition of their loan portfolios-commercial banks make loans to a much more varied clientele composed of consumers as well as commercial and industrial borrowers. Credit unions are much more focused, meeting member demands for a growing variety of loans as their average size increases and their management's capabilities expand.

TABLE 5 Measures of Loan Quality: 1990-92 (1)

Percent             Credit Unions       U.S. Commercial Banks
Year               1990   1991  1992    1990    1991    1992

Net Charge-offs    0.65   0.65  0.59    1.42    1.58    1 29
Delinquency Rate   1.70   1.59  1.28    5.23    5.90    5 24
Loss Provisions    0.75   0.75  0.64    1.64    1.65    1.31



(1.) As a percentage of average outstanding loans. Delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent.


DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty.
 loans are non-accrual loans and those that are accruing interest but are more than thirty days past due. Source: Annual Report, National Credit Union Administration, 1989-1992. "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993.

The delinquency delinquency

Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported.
 rate experienced on loan portfolio also reflects the very different compositions of the two institutions. Credit union delinquency rates have continually con·tin·u·al  
adj.
1. Recurring regularly or frequently: the continual need to pay the mortgage.

2.
 fallen since 1990, from 1.70 percent of average loans outstanding to 1.28 percent at year end 1992. This pattern reflects the significant efforts made by credit union managements to not only expand portfolios but also enhance their quality. In contrast, commercial banks actually experienced a rising delinquency rate from 5.23 percent in 1990 to 5.9 percent in 1991. The rate came down in 1992, but only to the 5.24 percent level.

Not only are the trends experienced by the two institutions different, with commercial banks essentially steady while credit unions are declining significantly (almost 25 percent in 3 years), but the overall delinquency levels are quite different too. Commercial banks have been experiencing delinquency rates that are 3 to 4 times the level of credit unions! Actual loan charge-offs also show an interesting pattern. With declining interest rates, loan quality has been on the rise for both types of institutions. Net charge-offs have been declining for commercial banks and credit unions. However, the overall charge-offs at commercial banks have consistently been double those of the credit union industry.

In order to maintain their economic viability in a competitive environment, commercial banks have had to charge higher rates or pay less to depositors in order to compensate for the overall lower quality of their loan portfolios. This factor has contributed to the ability of credit unions to successfully expand their consumer financing activities.

Changes in Capital

Commercial banks may increase their capital accounts by issuing more securities to the investment community or directing a portion of annual profits after taxes (i.e. retained earnings) to their capital accounts. In contrast, credit unions have only one source of capital, the excess of income over expenses in any given period of time. Since 1985 the commercial banking industry has expanded its equity base in every year except 1987. The rates of increase ranged from a low of 4.2 percent in 1989 to a high of 13.8 percent in 1992. While commercial banks have increased their capital by single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1.

digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus.
 growth rates in 7 out of the past 8 years, all federally insured credit unions have expanded capital by double digit rates in every one of those years. They consistently generated growth rates 50 to 150 percent higher than the commercial banking industry!

The differentials exhibited in Table 6 are a function of some of the following factors. Commercial banks are taxable institutions while credit unions are not subject to income taxes on earnings. In the case of commercial banks in recent years, where the statutory tax rate is 34 percent, their effective tax rate has been about 5 percent. Therefore, this has been only a small factor contributing to slower growth of their capital. Commercial banks have shareholders who are generally paid dividends. Any such payments reduce the retained earnings that could otherwise enhance capital. In contrast, credit unions must contribute to their regular reserve accounts, yet these transfers do contribute to their total capital account. Finally, any remaining funds being generated by the credit union are allocated to their "undivided UNDIVIDED. That which is held by the same title by two or more persons, whether their rights are equal, as to value or quantity, or unequal.
     2. Tenants in common, joint-tenants, and partners, hold an undivided right in their respective properties, until
 earnings" account. This account is very similar to the retained earnings account found at commercial banks and also contributes to their capital.

TABLE 6 Change in Total Equality Capital: 1985-92 (1)

                                  Credit Unions

            Federally Chartered,   State Chartered.   All Federally
Percent     Federally Insured      Federally Insured   Insured CUs
Year         Credit Unions           Credit Unions        (Total)

1985             22.35                    33.16            26.09
1986             17.59                    19.45            18.27
1987             15.99                    14.15            15.31
1988             15.33                     9.86            13.33
1989             12.58                    11.98            12.37
1990             11.31                    10.78            11.12
1991             11.54                    24.28            16.01
1992             18.93                    21.75            19.99

Percent         U.S. Commercial
Year               Banks
                   Change in
                Equity Capital

1985             9.8
1986             7.5
1987            -0.7
1988             8.9
1989             4.2
1990             6.9
1991             5.8
1992            13.8



(1.) Change in equity capital calculated from year end to year end. Source: Annual Report, National Credit Union Administration, 1985-1992. "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993.

IV. Conclusions

Our hypotheses concerning the relative profitability of credit unions compared with the banking industry are supported by the results presented in the paper. Our data show a narrowing of spreads between the two industries in many areas of performance. Credit unions have been very successful in the new deregutory environment. Credit union loan portfolios have grown more rapidly than either commercial banks' or savings institutions'. Their net interest margins have been above the banks' in recent years.

Non-interest margins are negative and higher for credit unions than for commercial banks. Unlike banks, credit unions have sufficient fee based revenues to offset a higher proportion of operating expenses. In terms of operating expenses, these industries have similar average costs, with slightly lower costs for credit unions.

Commercial banks and credit unions are experiencing growth in assets faster than growth in loans in the last few years. Therefore, their investment portfolios have been increasing in absolute and relative size. This tends to hold down profitability since margins on loans are greater than those on investments.

Real estate loans as a percentage of assets have been growing significantly for both credit unions and commercial banks in the last 8 years. This could be an area of concern in the future, given the inherent maturity mismatch mismatch

1. in blood transfusions and transplantation immunology, an incompatibility between potential donor and recipient.

2. one or more nucleotides in one of the double strands in a nucleic acid molecule without complementary nucleotides in the same position on the other
 risk associated with their shorter term liabilities. Unless loans are made at variable rates they could also be exposed to interest rate risk.

The credit union industry's performance its larger depository competitors has been very creditable cred·it·a·ble  
adj.
1. Deserving of often limited praise or commendation: The student made a creditable effort on the essay.

2. Worthy of belief: a creditable story.
. By focusing clearly on the consumer (credit union member) niche, credit unions have generated a record of performance that is indeed exemplary. They are likely to end the 1990s in even a stronger competitive position with continued focus on the consumer financial services.

Growth in the equity capital accounts of credit unions has been consistently more than double that of commercial banks since 1985. The result is a higher capital-asset ratio for the industry giving it a substantial advantage with regard to overall "safety and soundness" compared with commercial and savings banks.

Notes

[1.] FDIC FDIC

See: Federal Deposit Insurance Corporation


FDIC

See Federal Deposit Insurance Corporation (FDIC).
, Statistics on Banking 1992: A Statistical Profile of the United States Banking Industry. Washington Washington, town, England
Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area.
, D.C., June June: see month.  1993.

[2.] The Fed has expanded the list of allowed activities of banks in recent years, including broking Bro´king

a. 1. Of or pertaining to a broker or brokers, or to brokerage.
Redeem from broking pawn the blemished crown.
- Shak.
, underwriting Underwriting

1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt).

2. The process of issuing insurance policies.
, etc. See various issues of the Federal Reserve Bulletin for legal developments.

[3.] Depository Institutions Deregulation and Monetary Control Act of 1980 opened up price competition in depository institutions.

[4.] Garn-St. Germain Act expanded powers of thrift institutions Thrift institution

An organization formed as a depository for primarily consumer savings. Savings and loan associations and savings banks are thrift institutions.
 in the area of product and services offered by depository institutions.

[5,] Defined as Fee Income minus Operating Expenses.

References

Bundt, Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM).

The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs
, and Barry Barry, Welsh Barri, town (1991 pop. 45,053) and port, Vale of Glamorgan, S Wales, on the Bristol Channel. Once a major coal-exporting port, its more diversified export products include cement, flour, and steel products.  Keating Keating may refer refer to the following: People
For people with the surname Keating, see Keating (surname) Places
Several places in the US:
  • Keating Township, Potter County, Pennsylvania
  • Keating Township, McKean County, Pennsylvania
, "Depository Institution Competition in the Deregulated Environment: The Case of the Large Credit Union," Applied Economics, 1988, 1333-42.

Brunner Brunner, Brünner, Bruenner may refer to: People
Brunner came from Tyrolean and Bavarian place names, or Brno.
  • Adolf Brunner (1901–1992), Swiss composer
  • Alois Brunner (b.
, Allan Allan can refer to:
  • Allan, Saskatchewan, Canada
  • Alan (Barbie doll) or Allan, Barbie's friend
  • Allan, a Clan Grant split (or sept)
  • Ahlawat or Allan, an ethnic clan in India
  • Allan, the Allaine's lower course, in France
  • Allan
 D., and William William, crown prince of Germany
William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack
 B. English 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is , "Profits and Balance Sheet Development at U.S. Commercial Banks in 1992," Federal Reserve Bulletin, July 1993, 649-673.

Brunner, Allan D., Diana Diana, in Roman religion
Diana (dīăn`ə), in Roman religion, goddess of the moon, forests, animals, and women in childbirth. She was probably originally a forest goddess and a special patroness of women.
 Hancock, and M. McLaughlin Mc·Laugh·lin   , John Born 1942.

British jazz guitarist best known for his virtuosic playing and for his affinity for flamenco and Eastern music.
, "Recent Developments Affecting Profitability and Practices of Commercial Banks," Federal Reserve Bulletin, July 1992, 459- 483.

Brunner, Allan D., John V. Duca, and M. McLaughlin, "Recent Developments Affecting Profitability and Practices of Commercial Banks," Federal Reserve Bulletin, July 1991, 505-527.

Burger, Albert Albert, German churchman
Albert, 1490–1545, German churchman, cardinal of the Roman Catholic Church. A member of the house of Brandenburg, he became (1514) Archbishop of Mainz.
 E., and Tina Dacin, "Field of Membership: An Evolving Concept," Madison Madison, cities, United States
Madison.

1 City (1990 pop. 12,006), seat of Jefferson co., SE Ind., on the Ohio River; settled c.1806, inc. 1838. It is a port of entry and a tobacco marketing center.
, WI: Filene Fi·lene   , Edward Albert 1860-1937.

American merchant who built William Filene and Sons, a successful dry goods store, and promoted the American credit union movement.
 Research Institute, 1991.

Cargill Cargill, Incorporated is a privately held, multinational corporation, and is based in the state of Minnesota in the United States. It was founded in 1865, and has grown into the world's second largest privately held corporation (in terms of revenue). , Thomas F., "Recent Research on Credit Unions: A Survey." Journal of Economics and Business, Winter 1977, 155-62.

Courter Court´er   

n. 1. One who courts; one who plays the lover, or who solicits in marriage; one who flatters and cajoles.
, Eileen, "Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma.  CUs Create Innovative Programs." Credit Union Management, September September: see month.  1991, 12.

Cox, William N., and Pamela Pamela

sweet maidservant who chastely repels disgraceful advances, marries her aristocratic pursuer, and attempts to reform him. [Br. Lit.: Richardson Pamela]

See : Virtuousness
 V. Whigham, "What Distinguishes Larger and More Efficient Credit Unions?" Economic Review, Federal Reserve Bank of Atlanta The Federal Reserve Bank of Atlanta is responsible for the 6th District of the Federal Reserve, which covers Alabama, Florida, Georgia, and parts of Louisiana, Mississippi, and Tennessee. , October 1984, 34-41.

Credit Union National Association, "Operating Ratios Operating Ratio

A ratio that shows the efficiency of management by comparing operating expense to net sales:
 and Spreads," 1980-1992.

Danker, Deborah, and Mary M. McLaughlin, "Profitability of Insured Commercial Banks in 1983," Federal Reserve Bulletin, November 1984, 802-818.

Danker, Deborah, and Mary M. McLaughlin, "Profitability of U.S Chartered Insured Commercial Banks in 1985," Federal Reserve Bulletin, September 1986, 618-631.

Danker, Deborah, and Mary M. McLaughlin, "Profitability of U.S. Chartered Insured Commercial Banks in 1986." Federal Reserve Bulletin, July 1987, 537-551.

Duca, John V., and M. McLaughlin, "Developments Affecting Profitability of Commercial Banks," Federal Reserve Bulletin, July 1990, 477-499.

Federal Reserve Bank of Chicago Coordinates:

The Federal Reserve Bank of Chicago is one of twelve regional Reserve Banks that, along with the Board of Governors in Washington, D.C.
, "Leveling the Playing Field-A Review of the DIDMCA of 1980 and the Garn-St. Germain Act of 1982," Chicago, IL: Federal Reserve Bank of Chicago, December 1983.

Fried, Harold O., and C. A. Knox Lovell, "Evaluating the Performance of Credit Unions," Center for Credit Union Research, School of Business, University of Wisconsin-Madison “University of Wisconsin” redirects here. For other uses, see University of Wisconsin (disambiguation).
A public, land-grant institution, UW-Madison offers a wide spectrum of liberal arts studies, professional programs, and student activities.
, 1993.

Heaton, Gary G., and Constance R. Dunham, "The Growing Competitiveness of Credit Unions," New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt.  Economic Review, May/June 1985, 1934.

Hoel, Robert F., "Diversification Improves Stability," Credit Union Magazine, April 1990.

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Kaushik, S. K., and R. H. Lopez, "The Structure and Growth of the Credit Union Industry in the United States: Meeting Challenges of the Market," The American Journal of Economics and Sociology, Vol. 53, No. 2, April 1994, 219-243.

Kim, Y. H., "Economies of Scale and Economies of Scope in Multiproduct Financial Institutions: Further Evidence From Credit Unions, Journal of Money, Credit and Banking, 1986, 18, 220-26.

Kohers, T., and D. Mullis, "An Update on Economies of Scale in Credit Unions," Applied Economics, 1988, 20, 1653-50.

Lee, Pamela A., "Introduction to Credit Unions," 4th ed. Dubuque, Iowa Dubuque is a city in the U.S. State of Iowa, located along the Mississippi River. Its population was estimated at 57,696 in 2006,[3] making it the eighth-largest city in the state. : Kendall/Hunt Publishing Co., 1990.

Lovati, Jean M., "The Growing Similarity Similarity is some degree of symmetry in either analogy and resemblance between two or more concepts or objects. The notion of similarity rests either on exact or approximate repetitions of patterns in the compared items.  Among Financial Institutions." Review, Federal Reserve Bank of St. Louis, October 1977, 2-11.

Mallinson, Eugenie, "Profitability of Insured Commercial Banks in the First Half of 1983," Federal Reserve Bulletin, December 1983, 885-892.

McLaughlin, Mary M., and Martin H. Wolfson, "Profitability of Insured Commercial Banks in 1987," Federal Reserve Bulletin, July 1988, 403-418.

Moran Moran

equitable councillor to King Feredach. [Irish Hist.: Brewer Dictionary, 728]

See : Justice
, Michael J., "Thrift Institutions in Recent Years," Federal Reserve Bulletin, Vol. 68, No. 12, December 1982, 725-741.

Negri Opper, Barbara, "Profitability of Insured Commercial Banks," Federal Reserve Bulletin, August 1982, 453-465.

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Secura Group, "The Credit Union Industry: Trends, Structure, and Competitiveness," Washington, D.C., November 1989.

U. S. Congress, "Reforming Deposit Insurance, Congressional Budget Office The Congressional Budget Office (CBO) is responsible for economic forecasting and fiscal policy analysis, scorekeeeping, cost projections, and an Annual Report on the Federal Budget. The office also underdakes special budget-related studies at the request of Congress. , September 1990.

Von der Ohe, Robert, "Can You Ever Have Too Much Capital?" Credit Union Executive, 1991, 24-26, 29-31.

National Credit Union Administration, "Causes of Credit Union Failures 1981-1985." Research Study, No. 4, Washington, D.C.: National Credit Union Administration, Office of the Chief Economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the , September 1987.

Surendra K. Kaushik and Raymond H. Lopez, The authors are on the faculty of the Lubin School of Business The Joseph I. Lubin School of Business is the business school of Pace University. It was named after Joseph I. Lubin, an alumnus and benefactor of the school. The school was established in 1906 as the Pace School of Accountancy to prepare men and women for the CPA exam.  of Pace University, Graduate Center, One Martine Avenue, White Plains, NY 10606. Shwetha Kamath, Edmund Douglas, and Michael Brancamp provided research assistance for this paper. The authors wish to thank the editor and an anonymous referee A judicial officer who presides over civil hearings but usually does not have the authority or power to render judgment.

Referees are usually appointed by a judge in the district in which the judge presides.
 for their helpful comments on an earlier version.
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