credit unions. Most investment banks consider all but the few largest credit unions too small to be clients, but Bear Stearns says it thinks it can succeed by attracting enough customers. "Credit unions have been neglected because their asset sizes are small compared to other financial institutions," said Wade Charles Barnett, managing director of the New York investment bank's credit union financial services unit. "But when you start to look at credit unions on a cumulative basis, they have a lot of power in the industry." The credit union group primarily targets the 300 largest institutions, or those with assets exceeding $180 million, and so far it has 70 clients. The base is sufficient to make the operation cost-effective, and Bear Stearns hopes that number will grow through word-of-mouth, Mr. Barnett said. Banking consultant Bert Ely said the move is a good one for Bear Stearns and can be worthwhile for some credit unions. "Credit unions represent another pool of institutional customers," said the Alexandria, Va., consultant. "For a big enough and sophisticated enough credit union it might be worthwhile." Mr. Barnett has worked with credit unions for 10 years, originally with Oppenheimer & Co. and then with CS First Boston. First Boston eliminated its credit union operation earlier this year when it shut down operations targeting the middle market, Mr. Barnett said. Bear Stearns hired Mr. Barnett and some of his coworkers seven months ago, and Mr. Barnett believes the firm is committed to its credit unions focus. "Bear Stearns has a long-term focus on middle-market institutions," he said. Besides selling securities, Bear Stearns helps perform balance sheet analysis for its clients. The credit union group has only four employees, but they draw on Bear Stearns' resources, including the high-tech financial analytics and structured transactions group, which runs computer models to measure investment risks. The investment bank holds conferences for its clients, and a meeting last month focused on risk-based lending and balance sheet optimization. Attendees generally were impressed with Bear Stearns' services. Bear Stearns also provides regulatory updates. Mr. Barnett declined to comment on the costs of the services, but one customer, Gary Oakland, said the price tags are reasonable. "We do buy treasuries and agencies from them," said Mr. Oakland, chief executive of $2 billion-asset Boeing Employees' Credit Union, Seattle. "Sometimes they're cheaper than others, sometimes they're more expensive." Sarah Romanick, director of education for the National Association of Federal Credit Unions, believes the services Bear Stearns offers are more important to credit unions as the financial services industry grows more competitive. Mr. Barnett has spoken at several conferences held by the Arlington, Va., trade group. "Accounting and regulatory rules are changing and that can affect your bottom line," said Ms. Romanick, herself a former credit union executive. "Today it's not as simple as it used to years ago."

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