ARLINGTON, Va. — When Leap Year was created, the goal was to get the seasons to line up with the calendar and ensure everyone was celebrating Easter at the same time. But the Feb. 29 Leap Day this week will also have a small but measurable effect on credit union balance sheets.
"You get one more day of interest as investment and loan return, but have to pay more for interest on savings," said Tun Wai, NAFCU's chief economist. "Since revenue is more than costs, the net impact would be higher earnings."
That's not all. As Steven G. Lutz, SVP/CFO at GECU in El Paso noted, Leap Day affords not only the opportunity to increase revenue, but also the opportunity to offer more service at his credit union by handling 15,185 more online inquiries, answering 1,345 more phone calls and opening 44 more accounts.
"Because of the additional business day in February, we can pay our members an additional $171,000 in dividends, make $1.84 million more loans and create an additional $171,000 in member equity," Lutz said.
In 2004, Leap Day created an additional $25 billion in production in the U.S. That's roughly equal to the gross national products of Luxembourg and Lithuania combined, according to the now-defunct Phoenix-based accounting firm LeapSource.
America's 90-million production workers will earn an additional $6 billion on Leap Day, but salaried workers will see no extra pay. Workers will consume an estimated 82 million additional cups of coffee and sent 1.1-billion extra e-mails on Leap Day, according to CBS MarketWatch.
"The average credit union (with about $88 million in assets) spends around $8,091 per day on operating expenses," observed Erin Mendez, chairwoman of CUNA's CFO Council. "They also earn about $1,811 per day in income."
"We clear $7,970 in debit and credit card transactions and clear 11,387 checks valued at $49,818," Lutz added — all of which require some sort of computer or human-based processing.
On the technological front, calendrical anomalies like Leap Day can sometimes cause computer-related problems, but they are usually minor as a whole, as opposed to the near-panic that the run-up to turn of the millennium nine years ago. Most of the world has adopted the Gregorian calendar and, subsequently, written code into all of their computers running financial and governmental data programs that address the Leap Day issue.
According to Leapzine.Com, a website devoted to everything Leap Day, most programming snafus related to Leap Day occur when driver's licenses and birth certificate dates do not match. It was relatively common in the past to encourage parents to choose either Feb. 28 or March 1 for their child's birthdate.
Gail Kohler, vice chairwoman of the CUNA Technology Council, said any comparisons of Leap Day to the millennium issue facing programmers in 1999 is unfounded. "As this is not a once-in-a-century event, we don't expect any program issues. As I'm an optimist, I'd say any economic costs should be offset by additional economic opportunity."
(c) 2008
