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					The Benefits of Membership



Customized Analysis of Member Benefits For:



              Minnesota


                  June 2011



                   Prepared by:

      Credit Union National Association
       Economics and Statistics Department
                                              Minnesota
                               The Benefits of Membership
Credit unions generally provide financial benefits to members through lower loan rates, high
saving rates, and fewer fees than banking institutions.

The Credit Union National Association (CUNA) estimates that Minnesota credit unions
provided $114,241,043 in direct financial benefits to the state’s 1,511,055 members during the
twelve months ending June 2011.
                                                                                        (1).
These benefits are equivalent to $76 per member or $144 per member household

Estimated total benefits of credit union membership are calculated by accounting for
differences in credit union and bank pricing. Specifically, average credit union savings account
yields, loan interest rates and fees are compared to average bank savings account yields, loan
interest rates and fees. The interest rate differences are then applied to respective average
credit union loan and savings balances. Fee differences are weighted and applied to credit
union non-interest income to obtain the total estimated benefits arising from fees.

The per-member and per-household benefits delivered by Minnesota credit unions are
substantial. But, these benefits are averages. Mathematically, that means the total benefits
provided are divided across all members (or all member households) - even those who
conduct very little financial business with Minnesota credit unions.

Consider this:

Financing a $25,000 new automobile for 60 months at a Minnesota credit union will
save members an average $244 per year in interest expense compared to what they
would pay at a banking institution in the state.

Further, loyal members - those who use the credit union extensively - often receive total
financial benefits that are much greater than the average.

Minnesota credit unions excel in providing member benefits on many loan and saving
products. In particular, Minnesota credit unions offer lower average loan rates on the
following accounts: new car loans, used car loans, personal unsecured loans, first
mortgage-fixed rate, first mortgage-adjustable rate, home equity loans, credit cards
loans.

Minnesota credit unions also pay members higher average dividends on the following
accounts: regular savings, share draft checking, money market accounts, certificate
accounts, IRAs.




Source: Datatrac, NCUA, and CUNA.
(1)Assumes 1.9 credit union members per household.
                                 Recent Comparative Interest Rates for Loan Products
                                        Credit Unions vs. Banking Institutions
        14.00
                                                                                                                                               13.19

                                                                                                                               12.11
                                                   11.90
        12.00
                                               10.98                                                                      11.15
                                                                                                                                          10.76

        10.00



         8.00
Rates




                                        6.52
                         6.19
         6.00
                                                                                                                  5.17
                  4.42                                                                       4.57 4.67     4.48
                                 4.31
                                                                      3.97   3.88 3.97
         4.00                                                  3.65




         2.00



         0.00
                60-month new 48-month used Unsecured loan      5-year      15-year fixed   30-year fixed Home equity /   Credit card -   Credit card -
                 car (A paper) car (A paper) (A paper)    adjustable rate    rate 1st        rate 1st     2nd mtg, 80%      classic         gold
                                                          1st mortgage, 0 mortgage, 0 pts mortgage, 0 pts   LTV 0 pts
                                                                 pts
                                                           Credit Unions     Banking Institutions
                                                   Recent Comparative Interest Rates for Savings Products
                                                           Credit Unions vs. Banking Institutions

                                                                                                                                       0.75
                                    Retirement (IRA) accounts
                                                                                                                                0.67




                                                                                                                                                              0.94
                            1 Year certificate $10,000 balance
                                                                                                                                                0.84
Type of Savings Product




                                                                                                                        0.56
                                      Money market accounts
                                                                                                                 0.50




                                                                             0.17
                          Share draft checking, $5,000 balance
                                                                           0.15




                                                                                    0.21
                              Regular savings, $1,000 balance
                                                                                  0.20



                                                             0.00   0.10      0.20         0.30     0.40      0.50       0.60   0.70     0.80          0.90      1.00
                                                                                                              Rates


                                                                             Banking Institutions    Credit Unions
                                              Selected June 2011 Fees
                                       Credit Unions vs Banking Institutions
$2,500.00

                                                                                            $2,280.00     $2,309.00




$2,000.00




$1,500.00




$1,000.00




 $500.00




               $25.00         $30.00                       $20.00             $35.00
   $0.00
            Share draft checking, NSF fee                      Credit cards, late fee       Mortgages, closing costs

                                               Credit Unions         Banking Institutions
                                                          Minnesota
                                             Credit Union and Banking Instituion
                                    Mid-Year 2011 Average Interest Rates and Fees
                                                  Average Rate at           Average Rate           Rate Difference
Loan Products                                    Credit Unions (%)          at Banks (%)            vs. Banks (%)
60-month new car (A paper)                                        4.42                      6.19                     -1.77
48-month used car (A paper)                                       4.31                      6.52                     -2.21
Unsecured loan (A paper)                                         10.98                     11.90                     -0.93
5-year adjustable rate 1st mortgage, 0 pts                        3.65                      3.97                     -0.32
15-year fixed rate 1st mortgage, 0 pts                            3.88                      3.97                     -0.09
30-year fixed rate 1st mortgage, 0 pts                            4.57                      4.67                     -0.10
Home equity / 2nd mtg, 80% LTV 0 pts                              4.48                      5.17                     -0.70
Credit card - classic                                            11.15                     12.11                     -0.97
Credit card - gold                                               10.76                     13.19                     -2.43

Savings Products
Regular savings, $1,000 balance                                      0.21                   0.20                     0.02
Share draft checking, $5,000 balance                                 0.17                   0.15                     0.02
Money market accounts                                                0.56                   0.50                     0.06
1 Year certificate $10,000 balance                                   0.94                   0.84                     0.11
Retirement (IRA) accounts                                            0.75                   0.67                     0.08

Fee Income
Share draft checking, NSF fee                                   $25.00                  $30.00                   -$5.00
Credit cards, late fee                                          $20.00                  $35.00                  -$15.00
Mortgages, closing costs                                     $2,280.00               $2,309.00                  -$29.00

Source: Datatrac
                                           Estimated Total Loan Rate Benefit
                                          Credit Unions vs Banking Institutions
$45,000,000
                              $41,668,388

$40,000,000


$35,000,000


$30,000,000


$25,000,000


$20,000,000

                                                                                                                         $15,343,079
$15,000,000
              $12,921,302


$10,000,000
                                                                                                                                         $7,170,348
                                                                   $5,247,868
 $5,000,000                                      $2,956,552
                                                                                      $743,946          $768,599
        $0
              New car loans   Used car loans      Personal     5-year adjustable 15-year fixed rate 30-year fixed rate   Home equity /   Credit cards
                                               unsecured loans rate 1st mortgage 1st mortgage         1st mortgage       2nd mortgage
                                                                                                                             loans
                                                                      Types of Loan Products
                              Estimated Total Savings Dividend Benefit
                                Credit Unions vs. Banking Institutions
$5,000,000


$4,500,000                                                                          $4,389,574



$4,000,000


$3,500,000


$3,000,000


$2,500,000


$2,000,000                                                  $1,824,439


$1,500,000
                                                                                                              $1,120,816

$1,000,000

               $493,790
 $500,000                           $334,943


       $0
             Regular shares    Share draft checking   Money market accounts     Certificate accounts   Retirement (IRA) accounts

                                                      Type of Savings Product
                                               Estimated Minnesota Credit Unions Financial Benefits
                                                                                                            Mid-Year 2011

                                                                                                                                                       Rate            Total
                                                                                                                         Avg. Balance               Difference    Financial Benefit
                                                                                                                              at                  vs. Minnesota       to Your
          Loans                                                                                                       Credit Unions (1)           Banks (%) (2)      Members
          New car loans                                                                730,017,090                                                    -1.77                $12,921,302
          Used car loans                                                             1,889,722,823                                                    -2.21                $41,668,388
          Personal unsecured loans                                                     319,627,287                                                    -0.93                 $2,956,552
          5-year adjustable rate 1st mortgage                                        1,665,989,791                                                    -0.32                 $5,247,868
          15-year fixed rate 1st mortgage                                              826,606,246                                                    -0.09                   $743,946
          30-year fixed rate 1st mortgage                                              768,599,492                                                    -0.10                   $768,599
          Home equity / 2nd mortgage loans                                           2,207,637,215                                                    -0.70                $15,343,079
          Credit cards                                                                 538,617,716                                                    -0.97                 $7,170,348
          Interest rebates in period                                                                                                                                           $50,446
          Total CU member benefits arising from lower interest rates on loan products:                                                                                     $86,870,529

          Savings
          Regular shares                                                                                                          3,291,933,063       0.02                    $493,790
          Share draft checking                                                                                                    1,674,714,620       0.02                    $334,943
          Money market accounts                                                                                                   3,040,731,557       0.06                  $1,824,439
          Certificate accounts                                                                                                    4,180,546,297       0.11                  $4,389,574
          Retirement (IRA) accounts                                                                                               1,358,564,517       0.08                  $1,120,816
          Bonus dividends in period                                                                                                                                                   $0
          Total CU member benefit arising from higher interest rates on saving products:                                                                                    $8,163,561

          Fee Income
          Total CU member benefit arising from fewer/lower fees:                                                                                                           $19,206,952


          Total CU member benefit arising from interest rates on loan and savings products and lower fees:                                                                $114,241,043

          Total CU member benefit / member:                                                                                                                                        $76
          Total CU member benefit / member household:                                                                                                                             $144


Source: Datatrac, NCUA, and CUNA
         (1) Average balance as of June 2011 and June 2010, according to the NCUA call report.; (2) Source for rates and fees: Datatrac;
                                                             Minnesota
                                                        Performance Profile

Demographic Information                                                        June 11                              June 10
Number of branches                                                                 380                                  388
Total assets ($ mil)                                                            15,977                               15,608
Total loans ($ mil)                                                              9,772                                9,740
Total surplus funds ($ mil)                                                      5,574                                5,256
Total savings ($ mil)                                                           13,972                               13,647
Total members (thousands)                                                        1,503                                1,521
Growth Rates (Trailing 12 months) *
Total assets                                                                          2.4   %                             4.3    %
Total loans                                                                           0.3   %                            -1.7    %
Total surplus funds                                                                   6.1   %                            18.6    %
Total savings                                                                         2.4   %                             6.4    %
Total members                                                                        -1.2   %                            -0.1    %
Earnings - Basis Pts. *
Yield on total assets                                                                432                                  458
Dividend/interest cost of assets                                                      96                                  144
Fee & other income                                                                   106                                  101
Operating expense                                                                    315                                  306
Loss Provisions                                                                       47                                   71
Net Income (ROA) after stabilization exp                                              79                                   13
Capital adequancy
Net worth / assets                                                                    9.9                                  9.5
Asset quality *
Delinquencies / loans                                                               1.7                                   2.0
Net chargeoffs / average loans                                                      0.7                                   1.1
Total borrower-bankruptcies                                                       4,624                                 5,890
Bankruptcies per 1000 members                                                       3.1                                   3.9
Asset/Liability Management
Loans / savings                                                                     69.9                                 71.4
Loans / assets                                                                      61.2                                 62.4
Long-term assets / assets                                                           34.9                                 31.4
Core deposits/shares & borrowings                                                   36.9                                 34.1
Productivity
Members/potentional members                                                         2.6                                  4.6
Borrowers/members                                                                  55.7                                 55.8
Members/FTE                                                                         386                                  380
Average shares/members ($)                                                        9,297                                8,975
Average loan balances ($)                                                        11,666                               11,478
Salary & Benefits/FTE                                                            61,945                               59,638

* Earnings, net chargeoffs, and bankruptcies are year-to-date numbers annualized. Due to significant seasonal variation, balance sheet growth
rates are for the trailing 12 months.

				
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posted:11/29/2011
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