/Alabama%20member%20benefits

The Benefits of Membership

Customized Analysis of Member Benefits For:

Alabama

March 2010

Prepared by:

Credit Union National Association Economics and Statistics Department

Alabama 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 Alabama credit unions provided $182,636,938 in direct financial benefits to the state’s 1,739,316 members during the twelve months ending March 2010.

These benefits are equivalent to $105 per member or $200 per member household (1).

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 Alabama 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 Alabama credit unions.

Consider this: Financing a $25,000 new automobile for 60 months at a Alabama credit union will save members an average $333 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.

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

Alabama 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 16.00 14.65

14.00 12.64

12.00

11.10

10.91

9.88

Rates

10.00

10.14

8.21

8.00 6.00

7.43

5.16

5.19 4.57

4.95

4.77

4.74

5.22

5.17 4.42

4.89

4.00 2.00 0.00 60-month new car (A paper)

48-month used car (A paper)

Unsecured loan (A paper)

5-year adjustable rate 1st mortgage, 0 pts

15-year fixed 30-year fixed Home equity / Credit card rate 1st 2nd mtg, 80% classic rate 1st mortgage, 0 mortgage, 0 LTV 0 pts pts pts

Type of Loan Product Credit Unions

Banking Institutions

Credit card gold

Recent Comparative Interest Rates for Credit Unions Saving Products Credit Unions vs. Banking Institutions 1.17 Retirement (IRA) accounts 1.77

1.45 Type of Saving Products

1 Year certificate $10,000 balance 1.93

0.90 Money market accounts 1.61

Share draft checking, $5,000 balance

0.24 0.54

0.34 Regular savings, $1,000 balance 0.84

0.00

0.50

1.00

1.50 Rates

Credit Unions

Banking Institutions

2.00

2.50

Selected First Quarter 2010 Credit Union Fees compared to Banking Institutions $2,500

$2,309.00

$2,280.00

Dollar Amount

$2,000

$1,500

$1,000

$500

$25.00

$20.00

$30.00

$35.00

$0

Alabama Share draft checking, NSF fee

Types of Fee Income Credit cards, late fee

Area Banks Mortgages, closing costs

Alabama Credit Union and Banking Instituion First Quarter 2010 Average Interest Rates and Fees Loan Products 60-month new car (A paper) 48-month used car (A paper) Unsecured loan (A paper) 5-year adjustable rate 1st mortgage, 0 pts 15-year fixed rate 1st mortgage, 0 pts 30-year fixed rate 1st mortgage, 0 pts Home equity / 2nd mtg, 80% LTV 0 pts Credit card - classic Credit card - gold

Average Rate at Credit Unions (%)

Average Rate at Banks (%)

Rate Difference vs. Banks (%)

5.16 5.19 10.91 4.57 4.77 5.22 4.42 11.10 9.88

7.43 8.21 12.64 4.95 4.74 5.17 4.89 14.65 10.14

-2.27 -3.02 -1.73 -0.38 0.03 0.05 -0.48 -3.55 -0.26

0.84 0.54 1.61 1.93 1.77

0.34 0.24 0.90 1.45 1.17

0.51 0.30 0.71 0.48 0.60

$25.00 $20.00 $2,280.00

$30.00 $35.00 $2,309.00

-$5.00 -$15.00 -$29.00

Savings Products Regular savings, $1,000 balance Share draft checking, $5,000 balance Money market accounts 1 Year certificate $10,000 balance Retirement (IRA) accounts

Fee Income Share draft checking, NSF fee Credit cards, late fee Mortgages, closing costs Source: Datatrac

Estimated Credit Union Loan Rate Benefits vs. Banking Institutions $70,000,000

$57,968,798

$60,000,000

$50,000,000

Dollar Amount

$40,000,000

$30,000,000

$27,839,824

$20,000,000

$7,539,549 $11,377,880 $10,000,000

$2,991,879

$4,037,597 $0

New car loans -$10,000,000

Used car loans

Personal unsecured loans

5-year adjustable rate 1st mortgage

15-year fixed 30-year fixed Home equity / Credit cards -$253,427 rate 1st rate 1st 2nd mortgage -$285,381 mortgage mortgage loans

Types of Loan Products

Estimated Credit Union Savings Dividend Benefits vs. Banking Institutions $25,000,000

$21,876,530 $20,000,000

Dollar amount

$17,420,977

$15,000,000

$11,605,409 $10,000,000

$8,602,775

$5,000,000

$3,906,899

$0 Regular shares

Share draft checking

Money market accounts Types of Saving Products

CUNA Economics and Statistics Department

Certificate accounts

Retirement (IRA) accounts

Estimated Alabama Credit Unions Financial Benefits First Quarter 2010

Loans

Avg. Balance at

Rate Difference vs. Alabama

Total Financial Benefit to Your

Credit Unions (1)

Banks (%) (2)

Members

New car loans 1,226,423,948 Used car loans 1,919,496,632 Personal unsecured loans 435,812,057 5-year adjustable rate 1st mortgage 1,062,525,404 15-year fixed rate 1st mortgage 844,756,918 30-year fixed rate 1st mortgage 518,874,301 Home equity / 2nd mortgage loans 629,869,237 Credit cards 417,728,512 Interest rebates in period Total CU member benefits arising from lower interest rates on loan products:

-2.27 -3.02 -1.73 -0.38 0.03 0.05 -0.48 -3.55

$27,839,824 $57,968,798 $7,539,549 $4,037,597 -$253,427 -$285,381 $2,991,879 $11,377,880 $44,416 $111,261,134

0.51 0.30 0.71 0.48 0.60

$21,876,530 $3,906,899 $11,605,409 $17,420,977 $8,602,775

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

4,331,986,185 1,324,372,552 1,634,564,665 3,629,370,126 1,445,844,479

Bonus dividends in period Total CU member benefit arising from higher interest rates on saving products:

$0 $63,412,590

Fee Income Total CU member benefit arising from fewer/lower fees:

$34,616,018

Total CU member benefit arising from interest rates on loan and savings products and lower fees:

$209,289,742

Total CU member benefit / member: Total CU member benefit / member household:

Source: Datatrac, NCUA, and CUNA (1) Average balance as of year-end 2007 and year-end 2008, according to the NCUA call report.; (2) Source for rates and fees: Datatrac;

$120 $229

Alabama Performance Profile Demographic Information Number of branches Total assets ($ mil) Total loans ($ mil) Total surplus funds ($ mil) Total savings ($ mil) Total members (thousands)

Mar-10 406 14,893 7,640 6,596 13,061 1,753

Mar-10 427 13,730 7,430 5,723 11,998 1,752

Growth Rates (Year-to-date) Total assets Total loans Total surplus funds Total savings Total members

3.1 -1.2 8.6 3.3 -1.0

Earnings - Basis Pts. Yield on total assets Dividend/interest cost of assets Fee & other income * Operating expense Loss Provisions Net Income (ROA) after stabilization exp *

433 140 144 313 50 68

478 194 157 334 51 56

Capital adequancy Net worth / assets

11.1

11.1

1.3 1.0 18 1.4

1.2 0.9 17 1.4

58.5 51.3 28.9 45.6

61.9 54.1 27.4 44.7

7.7 47.2 405 7,451 9,230 51,727

7.7 47.2 399 6,850 8,993 50,107

Asset quality Delinquencies / loans Net chargeoffs / average loans Total borrower-bankruptcies Bankruptcies per 1000 members Asset/Liability Management Loans / savings Loans / assets Long-term assets / assets Core deposits/shares & borrowings Productivity Members/potentional members Borrowers/members Members/FTE Average shares/members ($) Average loan balances ($) Salary & Benefits/FTE

% % % % %

5.2 0.8 12.4 6.1 1.4

% % % % %