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GAP CALCULATIONS

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					               GAP Calculation Guide
      The repriceable GAP ratio estimates the degree
of “matching” in terms of sensitivity to market change
between the asset side and the liability side of the
balance sheet. GAP can be measured at any time frame (example: 1 day, 1
month, 6 months, 1 year, 2 years). The Texas Credit Union League ALM
Resources attempts to assess the credit union’s GAP position for the next 6
months. This, in turn, allows the credit union to monitor the potential impact on
spread (asset yield vs. cost of funds) should a change in market rates occur.

      Instructions: Calculate formulas A through J on Pages 2 through 5. Use
this information to complete the repriceable GAP ratio on Page 6. An asterisk (*)
indicates a point of verification on the Key Ratio Report.

      When Page 6 is complete, return to Page 1 to determine current status of
sensitivity and the vulnerability of spread to market shift.

                       GAP/Total Assets Ratio & Rate Risk

      Range of 6-Month Repriceable                   Potential
            GAP/TA Ratio                         Rate-Risk Exposure
      -10% to +10%                                     Low
      -20% to -10% or +10% to +20%                     Modest
      <-20% or >+20%                                   High


                       GAP & Gross Spread Relationships

                                     When Short-Term Rates
      GAP/TA Ratio                   Fall             Rise
      Positive                       Lower Spread     Higher Spread
      Negative                       Higher Spread    Lower Spread
      Zero (Matched)                 No Effect        No Effect


                  Effect of a Rate Change on Gross Spread –
                  Commonly Referred to as a “Shock Test”

   Credit Union’s          x   Expected Change in       =   Estimated Change
 6-Month Repriceable            Average Level of                  in
   GAP/TA Ratio                 Short-Term Rates              Gross Spread

        -.23               x          +300 bp           =     69 bp Decline
                                                                in Spread

                                                              Rightmire/TCUL/2004
Repriceable Assets



(A) This calculation assumes that, of the amount disclosed on the Call Report
with repricing intervals less than one year, 90% of the credit union’s investments
will actually be available for repricing during the next six months.

                         Total Short-Term Investments
         (Using Call Report Data, Column A <1 Year) x 90% Assumption

                     ____________ x 90% = ____________ *



(B) Stated Cash on a Balance Sheet can be erratic and not necessarily
representative of cash amounts necessary to fund daily needs. This calculation
estimates daily cash needs and adjusts investable amounts accordingly.

    Minimum Cash

    ____________        12% of Share Drafts

+   ____________        1% of all other Member Deposits (excludes Non-Member
                        Deposits and Notes Payable) plus Dividends Payable

=   ____________        Minimum Daily Cash*

    Compare Minimum Cash with Stated Cash on the Balance Sheet

    ____________        Balance Sheet Cash

-   ____________        Minimum Daily Cash

=   ____________        Adjustment to or from Investments shown as Estimated
                        Surplus Cash*


(C) This calculation assumes that variable rate real estate loans adjust annually
and that all other VRLs adjust on a quarterly or semi-annual basis.

    50% of Real Estate VRLs + 100% of Consumer VRLs = VRL Input

      ____________ x 50% = ____________ + ____________ = ____________*




                                        2                     Rightmire/TCUL/2004
(D)   The credit union’s average loan maturity is needed to calculate the amount
of loan repayments over the next six months. This amount will be either loaned
or invested at the current market rate, providing the ability to adjust the income
stream on a portfolio of fixed rate loans.


                          AVERAGE LOAN MATURITY


       Beginning Loans + New Loans - Repayments = Ending Loans

 (1)   Beginning Loans + New Loans - Ending Loans = Repayments

       ____________ + ____________ - ____________ = ____________

 (2)   Repayments  Number of Months between Beginning and Ending
       Loans = Average Monthly Repayment

       ____________ ____________ = ____________ Monthly

 (3)   Average Loans  Average Monthly Repayments = Average in Maturity
       in Months

       ____________  ____________ = ____________ Months *




       Gap Time Frame (6 Months)  Average Loan Maturity = % of Loans
       Repaying in 6 Months

             6  ______________ = ______________ %


       % of Repays x Fixed Rate Loans {Total Loans - VRLs in (C)} =
       Dollar Amount of Loans that Repay in 6 Months

             ______________ % x ______________ = $ ____________ *




                                        3                     Rightmire/TCUL/2004
Repriceable Funds (Liabilities)


(E)    The calculation assumes that, of the amount disclosed on the Call Report
with repricing intervals less than one year, 90% of the member’s share
certificates and notes payable will actually be available for repricing during the
next six months.

            Short-Term Member Certificates + Non-Member Deposits
              (Call Report, Column A <1 Year) and Notes Payable


         ____________ + ____________ + ____________ = ____________

                           x 90% = ______________ *


(F)   The NCUA Call Report asks that the credit union disclose all IRA funds in
one total. Therefore, the ALM program assumes all amounts are 75% rate
sensitive within the next 6 months using the calculation below. From a GAP
perspective, a more accurate way would be to add all IRA CDs to the CD amount
above and show IRA Share Accounts, which are normally repriced monthly or
quarterly, as 75% rate sensitive.

                                   IRAs x 75%


            ________________ x 75% = ________________ *



(G)  Money Market deposit accounts are normally priced to market range on a
monthly basis, and, therefore, very sensitive to market changes.

                                  MMDAs x 75%


            ________________ x 75% = ________________ *




                                        4                     Rightmire/TCUL/2004
(H)    Share balances are included in a GAP calculation because the member
could move these monies to a higher yielding account within the credit union or
to another investment option outside the credit union. Both affect the credit
union’s GAP position. The likelihood of this movement is due, in part, to the
credit union’s average share balances.

Use the rate sensitivity factor disclosed on page 3 of your credit union’s most
recent Key Ratio Report to determine the percentage used in this category.

                     (Regular Shares + All Other Shares

                     + Dividends Payable) x ________%

      ____________ + ____________ + ____________ = ____________

                    x ________% = ____________ *



 (I)   Draft balances are included in a GAP calculation because the member
could move these monies to a higher yielding account within the credit union or
to another investment option outside the credit union. Both affect the credit
union’s GAP position. The likelihood of this movement is due, in part, to the
credit union’s average draft balances.

Use the rate sensitivity factor disclosed on Page 3 of your credit union’s most
recent Key Ratio Report to determine the percentage used in this category.


                        Share Drafts x _______%


                  ____________ x ______% = ____________ *



(J)   The ALM program calculates ratios using “Gross Total Assets”.

          Stated Assets + Allowance for Loan Losses = Gross Total Assets

            ____________ + ____________ = ____________ *




                                      5                     Rightmire/TCUL/2004
                                  REPRICEABLE GAP


Repriceable Assets


      ____________          Short-Term Investments (A)

+     ____________          Estimated Surplus Cash (B)

+     ____________          Variable Rate Loans (C)

+     ____________           Loans Repayments over the next 6 Months (D)

=    $____________          Repriceable Assets



Repriceable Funds (Liabilities)


      ____________          Short-Term Member Certificates (E)

+     ____________          IRA Accounts (F))

+     ____________          Money Market Deposit Accounts (G)

+     ____________           Regular Shares (H)

+     ____________           Share Drafts (I)

=    $____________          Repriceable Funds


     Repriceable Assets - Repriceable Funds = Repriceable GAP


      $______________ - $______________ = $______________ *



Repriceable GAP  Gross Assets (J) = Repriceable GAP/Total Assets Ratio


      $______________  $________________ = ________________% *
                                         6                  Rightmire/TCUL/2004

				
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