The BIG Margine SQUEEZE

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Compressed. Razor-thin. Squeezed. Those words and others are heard nearly every time credit unions and when talk turns to margins.

Since 2002, the return on average assets (ROA), which is one measure of a credit union's profitability, has been steadily declining. That year marked the last time the CU community's average ROA was above 100 basis points; in 2005 it dropped to 85 basis points.

Even more striking, if fees and other income are subtracted from ROA, the credit union community, on average, is left with a negative 40 basis points performance for year-end 2005.

Can anything be done? Will the trend crater or even reverse? Is the 1% ROA figure the yardstick by which credit unions should measure themselves? Why do some other credit unions continue to perform so well?

In this issue, beginning on page 13, The Credit Union Journal speaks with nearly two-dozen credit union leaders, analysts and other experts about the issue of declining margins and ROA. This special section will be followed up in coming weeks with additional coverage. As always, we invite your input.

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