# Presentation: 668646

## Net Worth RatiosRemain Strong

- 			 _**Nationwide**_**	**_**Indiana**_
**1991****	****	****  6.3%**
**1995****	****	****  9.2%**
**1998****	****	****10.9%**
**2003****	****	****10.7%**
**2004****	****	****10.9%****	****	**** ****11.0%**

## Loan-to-Share RatiosAre Slowly Recovering

- 			 _**Nationwide**_**	**_**Indiana**_
**2001****	****	****73.8%**
**2002****	****	****70.8%**
**2003****	****	****71.2%**
**2004****	****	****73.7%****	****	**** ****80.4%**

## Delinquency RatiosAre Improving

- 			 _**Nationwide**_**	**_**Indiana**_
**2001****	****	****0.82%**
**2002****	****	****0.79%**
**2003****	****	****0.76%**
**2004****	****	****0.71%****	****	**** ****0.75%**

## Concerns for the Future

**1) Slow Membership Growth**
**2) Disappearance of**
**       ****Small Credit Unions**
**3) Reputation Risks**
**4) Taxation**

## 1) Slow Membership Growth

- _Nationwide_

| 2001 | 79.3 Million | 2.3% | 2,136,604 | 0.9% |
| --- | --- | --- | --- | --- |
| 2002 | 80.9 Million | 2.0% | 2,146,776 | 0.5% |
| 2003 | 82.4 Million |  1.8% | 2,182,981 | 1.7% |
| 2004 | 83.7 Million |    2.1%*
Annualized |   2,185,248* |   0.1%*
Annualized |

- _Indiana_

- Members

- % Growth

- Members

- % Growth

## Slide 6

## Credit Union Membership from Different Ethnic Groups

**Sources: U.S. Census Bureau 2003 estimates, and CUNA Research Services, 2004 **

## Population Growth:New Markets

- Projected population growth through the year 2020:
**Asians: 80%**
**Latinos:  75%**
**African Americans:  28%**
- Caucasians:  9%
- (Before 2020, Caucasians will become a minority.)

## Slide 9

## Slide 10

## 3) Reputation RisksIndirect Lending

**Reliance on Third Parties**
**Accelerating Loan Losses**
**Volume out of Control***** ***

## Slide 12

## Indirect Lending Exposure

- (at credit unions making indirect loans)
-  14% of Assets
-  21% of All Loans
** ****133% of Net Worth**
* *

## “Bounce Protection” Programs

**Exploiting Least Creditworthy Members**
**Encouraging Irresponsible Behavior**
**Damaging CUs’ Pro-Consumer Reputation**

## 4) TaxationThreats to Tax Exemption

**Loss of Small Credit Unions**
**Large FOMs (Community Charters)**
**Lack of Consistent Documentation of Service to Underserved Areas**

## Current Concerns

**1) Information Technology Risks**
**2) Investment Risks**
**3) Interest Rate Risks**
**4) Declining Mortgage Market Share**

## 1) Information Technology Risks

**   **
**Changing State-of-the-Art Systems**
**Privacy Intrusions**
**Crashing**
**Hacking**

## 2) Investment Risks

**Collateralized Mortgage Obligations (CMOs)**
**Unrealized Losses**
**Actual Losses**

## Slide 20

## Slide 21

## Slide 22

**Notes:**
% of CU’s with fixed-rate first mortgages > 25% of assets increasing:  1996 – 6.2%, 1997 – 7.3%, 1998 – 8.6%, 1999 – 10.9%, 2000 – 10.9% 2001 – 9.8%, 2002 – 9.9%, 2003 – 11.6%, June 2004 – 8.9%.

## Slide 23

**Notes:**
Source of Subprime Mortgage Originations:  FRB: Speech: Gramlich 5/21/04 – quoted source Mortgage Statistical Annual
	Subprime originations:   2000 – $138 billion, 2001 - $173 billion, 2002 - $241 billion, 2003 - $332 billion 

## 24) PALS

** ****Free Workshops**
** ****Best Practices Website**

##         To Add Your Best Practices:

**        ****To Add *****Your***** Best Practices:**
**     ****e-mail **_[BoardMember.Matz@ncua.gov](mailto:BoardMember.Matz@ncua.gov)__          _1)  Name of your Credit Union
-           2)  Name of each innovative program
-           3)  Brief description of each program
-           4)  Contact person for each program
-           5)  Contact person’s phone number