CHOOSING THE RIGHT CREDIT UNION

Moolchand Raghunandan, Inshan Allaham, Riann Singh, Dionne Sara Hanson

Introduction

1jI" ili"_w ,.,=""= ,ffu, ~ global economy in these times, consumers are seeking the smartest

havens for their funds - those institutions that will protect and increase their net worth at minimum personal cost. In an alruming reality of a thousand falling on the left hand and ten thousand on the right where personal finances are concerned, how do contemporary consumers select a sound institution to effectively serve their financial and investment needs in order to protect their long-term financial interests and those of their families? Liz Pulliam Weston, the Web's most read personal finance writer, recently invited consumers who are disillusioned by fees, hidden penalties, unsatisfactory earnings and sub-optimal customer service at banks to switch to credit unions (Pulliam Weston 2009).

Credit unions offer distinctive strengths including a non-profit orientation in which member interests have traditionally been the paramount focus; relatively lower interest rates on loans; greater accessibility to loans and a more customized approach to their membership than that experienced at their larger counterpruts in the finance industry. They have also become noteworthy players in mutual funds and other

investment markets. It is fitting, then, for the academic community to explore the criteria that consumers can use in deciding how to choose a credit union that is worthy of their investment. To reiterate, the primary question asked by the consumer in this context is: How do I choose a viable credit union? In choosing a credit union, the consumer wants to associate with an institution that is both prosperous or at least viable in the present context and sustainable in the future . It is important but not sufficient to find a credit union that is doing well now. The strategies and practices of the credit union under consideration must evince the future agility of the institution ina turbulent global environment One would not want to eam large dividends in the short term and later fi nd that one's entire investment has vanished because of the credit union 's inability to compete effectively in the context of a global environment that is transforming with unprecedented intensity. It is therefore appropriate to use measures that will probe into both the current and future position of each institution under consideration in order to help the investor to make the wisest choice. This paper presents a combination of quantitative tools and qualitative measures that can assist the small man in choosing a viable credit union. While these measures and considerations are excellent for providing support to the potential investor in choosing a credit union, sound judgment in the context of one's unique circumstances is the fundamental criterion in making a good decision.

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Quantitative Tools

The quantitative tools presented are: • Ratio Analysis

o CAMEL o PEARLS o Simplified Ratio Analysis

• Other Quantitative Methods and Considerations

The industry-specific quantitative tools for assessing credit union viability are CAMEL and PEARLS. CAMEL and PEARLS employ an anal ytical approach in Finance called Ratio Analysis, which involves using the company's fmancial statements - particularly the Balance Sheet, Income Statement, Shru'eholders' Equity Statement and Cash Flow Statement - to compute ratios. These ratios are used to compare the performance of the company with past periods, other companies, industry averages and in certain cases, with rules of thumb. Aratio is a relationship between two numbers e.g.X Y = 2: J, meaning thatXis two times greater than Y Company agents use ratio analysis as a diagnostic model to identi fy problems and opportunities in a company as well as to set standards for performance. In the context of investor analyses, ratios can help the investor to di stinguish more viable and prosperous credit unions fi'om less viable and prosperous ones. It is recommended that ratio ruJalysis be performed on statements for at least three to five years such that the potential investor can gain insight into the quality of management over time in the institutions under consideration.

Ratios cannot be analyzed in a vacuum. The numbers 0 btained are intended to trigger furthe r questions that wi ll probe into the soundness of operations (Lermack 2003). As such, investors need to understand something about the institution and its strategies, the industry and the wider financial sector. It is also important in this context to examine how the ratios for each credit union under consideration compare with those of the others. CAMEL and PEARLS are two systems that use a matrix of ratios for assessing credit unions as a means of aiding investment decision-making.

CAMEL scores are relatively simple for the lay consumer to interpret whereas the PEARLS system requires analysis at a more professional level.

CAMEL

The CAMEL rating system is based upon an evaluation offive critical elements of a credit union's operations: Capital Adequacy, Asset Quali ty, Management, Earnings and Asset! Liability Management (NCUA).' This rating system is designed to take into account and reflect all significant financial and operational factors that exruniners assess in their evaluation of a credit union's performance. Under this system, ratings are assigned for each component (Capital Adequacy, Asset Quality, Management, Earnings, andAssetlLiability Management) in addition to the overall rating of a credit Wlion 's financial condition, with consideration also given to qualitative factors. Part of the examiner's qualitative analysis includes an assessment of the

'The NCUA is an independent federal agency that charters and supervises federal credit Wlions and insures savings in federal and most state-chruiered credit muons across the United States (NCUA website, accessed 19 May2010) .

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credit union's' risk management program. Examiners assess the amount and direction of risk exposure in seven categories: Credit, Interest Rate, Liquidity, Transaction, Compliance, Reputation and Strategy and determine how the nature and extent of these risks affect one or more of the CAMEL components.

The ratings are assigned on a scale from 1 to 5. Credit unions with ratings of 1 or 2 are considered to present few, if any, supervisory concerns, indicating strong to satisfactory performance and risk management practices that consistently provide for sound operations. On the other hand, credit unions with ratings of 3,4, or 5 represent moderate to extreme degrees of supervisory concern, indicating flawed, unsatisfactory or poor performance. Such performance, by itself or in combination with other weaknesses, directly impairs the viability of credit unions.

Capital provides the funding for growth as well as protection against fluctuations in earnings and insolvency. Capital adequacy is measured by the extent to which a credit union maintains a level of capital that is fully commensurate with its current and expected risk profiles. A score of 1 indicates a well­capitalized institution and is associated with a matrix of ratios including the Net Worth/Total Assets Ratio that must show at least 7% for credit unions with assets of $2M - $50M (NCVA Letter, March 2003).

The Asset Quality rating considers the quality and trend of all major assets, including loans, investments and real estate and reflects the present state of the assets as well as the likelihood of their deterioration or improvement based on both internal and external environmental factors. A score of I reflects high asset quality

and minimum portfolio risk. For example, when assessing the Delinquent Loans/Total Loans Ratio, this should be less than 1.25%.

Management ratings reflect an assessment of such factors as the quality of the strategic planning process of the institution, fmancial performance, internal controls, market penetration, responsiveness to recommenda­tions and a number of other managerial responsibilities. A management rating of I indicates that managers and directors are fully effective.

Earnings ratings reflect a credit union's ability to eam an appropriate return on assets which enables the institution to fund expansion, remain competitive and replenish andlor increase capital. A score of I indicates that a credit union is in a position to provide for loss absorption and capital formation with due consideration to asset quality, growth and trends in earnings. For example the Return on Average Assets Ratio should be at least 1 % for credit unions with assets of $2M-$50M (NCVA Letter, March 2003).

Asset! Liability Management is the process of evaluating, monitoring and controlling balance sheet risk (interest rate risk and liquidity risk). It also encompasses strategic and reputation risks. Interest rate risk measures the sensitivity and exposure of the credit union 's investment and loan portfolios to changes in interest rates. Liquidity risk measures the threat of being unable to meet fmancial obligations. A rating of 1 indicates that the credit union exhibits only modest exposure to balance sheet risk.

PEARLS

The acronym PEARLS represents Protection, Effective Financial Structure, Asset

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Quality, Rates of Return and Costs, Liquidity and Signs of Growth. PEARLS was developed by the World Council of Credit Unions (WOCCU) to monitor the financial stability of credit unions and serve as an early warning system for management decision-making (Credit Management, May 2002).

The PEARLS system for assessing credit union viability includes a monitoring tool employing financial ratios, a ranking tool for comparing credit unions, a business planning tool to promote high performance and other featw·es (WOCCU website, 19 November 2009).

For each component (protection, Effective Financial Structure, Asset Quality, Rates of Return and Costs, Liquidity and Signs of Growth), a set of financial ratios is used in the evaluation of credit union performance. As Evans (1997) noted, the WOCCU now uses PEARLS worldwide to monitor the performance of credit unions, to create·a universal language that each credit union can speak to and understand as well as to generate comparative credit union rankings. The WOCCU has provided a summary of the ratios used in the PEARLS system together with the goals that define excellent performance for a credit union. These ratios and goals are presented in Table 1. The PEARLS model is discussed here merely for informational purposes as the model typically . requires considerable professional insight in order to be effectively interpreted and used.

Richardson (2002) provides an interesting and relevant elaboration of each of these five components:

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.. Protection - A credit union has adequate protection ifit has sufficient provisions to cover 100% of all

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•

•

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delinquent loans for more than 12 months and at least 35% of loans delinquent between 1 and 12 months.

Effective Financial Structure - The PEARLS system measures credit union assets, liabilities and capital, then recommends the 'ideal' structure. Credit unions are encouraged to maximize earning assets as the means to achieve sufficient earnings. Net Loansrrotal Assets should range between 70% and 80% and the same applies to the Savings Depositsrrotal Assets ratio.

Asset Quality - An excess of non­earning assets negatively affects the income to a credi t union. PEARLS indicators are used to identify the impact of non-earning assets by analyzing delinquency ratios, percentages of non-earning assets and the fmancing of these. Delinquent Loans/ Total Loans should not exceed 5%. This criterion is less stringent than the CAMEL requirement of 1.25%.

Rates of return and costs -Segregating all of the essential components of net earnings facilitates the calculation of investment yields and assists in eval uating costs and operating expenses. PEARLS uses a matrix of ratios to trackreturns. For example, Gross Margins/ Average Assets should be at least 10%.

Liquidity - PEARLS analyses liquidity ji-om three perspectives: total net liquidity reserves, obligatory

TABLE 1. Pearls Ratios

P - Protection Goals (Excellence)

1. Loan Losses Allowances / Oelinq. >12 Mo. 100% 2. Net Loan Loss Allowances f WOCCU Allowance Required for

Delinq. 1-12 Mo. 35% 3. Complete Loan Charge-off of Delinq. > 12 Mo. Yes 4. Annual Loan Charge-offs f Average Loan Portfolio Minimized

5. Accum . Charge-offs Recovered f Accum. Charge-offs >75%

6. Solvency (Net Value of AssetsfTotal Shares & Deposits) 2:111 %

E - Effective Financial Structure Goals (Excellence)

1. Net Loans I Total Assets 70-80%

2. Liquid Investments I Total Asselsd" ':::;16%

3. Financial Investments I Total Assetsd :S2%

4. Non-financial Investments I Total Assets 0%

5. Savings Deposits I Total Assets 70-80%

6. External Credit I Total Assets 0-5%

7. Member Share Capital I Total Assetsd ::;20%

8. Institutional Capital I Total Assetse ~10%

9. Net Institutional Capital I Total Assetse ~10%

A - Asset Quality Goals (Excellence)

1 Total Loan Delinquency f Gross Loan Portfoliod ::;5%

2. Non-earning Assets I Total Assetsd ::;5%

3. Net Zero Cost Funds I Non-earning Assetse 2:200%

R - Rates of Return and Costs Goals (Excellence)

1 . Net Loan Income I Average Net Loan Portfolio Entrepreneuial Rate

2. Liquid hw. Income I Avg . Liquid Investments Market Rates

3. Fin . Investment Income I Avg. Fin. Investments Market Rates

4 . Non-fin . Inv. Income I Avg . Non-fin . Investmentse 2:R 1

5. Fin . Costs: Savings Deposits I Avg. Savings Deposits Marke Rates> Inflation

6. Fin . Costs: External Credit I Avg . External Credit Market Rates

7. Fin. Costs : Member Shares I Avg . Member Shares Market Rates, > R5

8. Gross Margin I Average Assets " E9=10%

9. Operating Expenses I Average Assetsd :':;5%

10. Provisions for Risk Assets I Average Assets Ap 1 ~100%, -P2~35%

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TABLE 1. Pearls Ratios - Cont'd

11 . Other Income or Expense I Average Assets

12. Net Income I Average Assets (ROA)

L - Liquidity

1. Liquid Assets - ST Payables I Total Deposits

2. Liquidity Reserves I Total Savings Deposits

3. Non-earning Liquid Assets I Total Assets

S - Signs of Growth (Annualized Rates)

1. Net Loans

2. Liquid Investments

3. Financia! Investments

4. Non-financial Investments

5. Savings Deposits

6. External Credit

7. Member Shares

S. Institutional Capital

9. Net Institutional Capital

10. Membership

Source: Imported from the WOCCU website, 8 March 2010 .

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Minimized

AE9=10%

Goals (Excellence)

15-20%

10%

< 1%

Goals (Excellence)

AE1=70-S0%

AE2 :516%

"E3 ::;;:: 2%

I\E4=O%

AE5=70-S0%

AE6=O-5%

/I. E? ;; 20%

"EB ~ 10%

AE9;::: 10%

In particular, membership should grow by at least 15% per year.

liquidity reserves and idle liquid funds, taking into account the fact that the concept of liquidity radically changes. Liquidity Reserves/ Total Sav ings Deposits should be approximately 10%.

Simplified Ratio Analysis

• Signs of growth - The advantage of the PEARLS system is that it links growth to profitability, as well as, to other key areas by eval uating the strength of the credit union as a whole.

The Finance literature provides a range of financial ratios for company analysis. Those that would be most valuable and simple enough to identify problem areas and indicate future opportUnities to the potential credit union member are presented in table 2.

TABLE 2. Simplified Ratio Analysis

Ratio Calculation Significance

Dividend Yield Annual Dividend! Current A measure of the return on each Market Price share

Payout Ratio Cash Dividends! Net Income A measure of the proportion of earnings that is distributed to shareholders

Return on Equity (ROE) Profit after taxes! Shareholders' A measure of the return on members' Equity (book value) investment in the Credit Union

Return on Assets (ROA) Net Income !Total Assets A measure of the efficiency and efficacy of existing assets

Debt to Assets Ratio Total DebtITotal Assets A measure of the solvency of the institution

Sustainable Growth Rate (SGR) ROE x Retention Ratio' A measure of the growth rate that

"Retention Ratio = Retained can be sustained by the credit Earnings! Net Income union SGR = f{Probability, Asset Efficiency, Leverage. Dividend Policy}

MemberShip Growth Rate (Current year membership- A Measure of the extent to which (Adapted from the Sales Last year membership) !Last the credit cunion is expanding its Growth Rate Ratio) year membership membership

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Other Quantitative Measures and Considerations

In addition to the ratios, the investor will also fmd it useful to compare absolute figures in the financial statements from year to year. For example, are revenues and profits growing over time? Are they increasing in a consistent marmer or erratically swinging up and down? (Lermack 2003). Are cash flows consistently positive? For example a surge in cash may not necessarily be an improvement in performance as this inflow could have resulted from a sale of assets required to keep a struggling institution afloat. Consistency is preferred over erratic movements as it tends to be reflective of greater stability in the institution and its management.

Another precaution is to look for large movements in speci fie items from one year to the next. For example if revenues have a big jump or a big fall from one particular year to the next or the total of fixed assets grows or falls sharply these occurrences should be investigated. Furthermore, the investor should review notes to the financial statements for additional information that may be significant to tile analysis.

Bankruptcy Prediction

Bankruptcy prediction asks the question: Will the company Jail? A number of indicators are examined to make this prediction. Some of the key ratios examined are:

• Total Liabilities to Total Assets (Relatively low ratios are desirable)

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.. Debt to Equity (Relatively low ratios are desirable) and

• Cash flow Jrom Operations to Total Liabilities (Relatively high ratios are desirable)

A more sophisticated user may employ Altman's Z-score model (with some modifications), which can be used to predict bankruptcy in tile short run (one to two years). The model combines five financial ratios as a measure of the likelihood of an institution going bankJupt. The Z- score can be calculated as follows: (Working CapitallTotalAssets x 1.2) + (Retained Earnings/Total Assets x 1.4) + (Operating IncomelTotal Assets x 3.3) + (Market Value of Common Stock and Preferred StockITotal Debt x .6) + (Sales/Total Assets x I).

The score calculated should be interpreted according to the table below:

TABLE 3. Probability of Bankruptcy

Score

1.80 or Less 1.81-2.7 2.80-2.90 3.0 or Higher

Probability of Short-term Illiquidity

Very High High Possible Not Likely

Studies measuring the effectiveness of the Z- score have shown that this model is very accurate in predicting bankruptcy and credit union risk at above 70% reliability (Eidleman 1995).

As noted above, the consumer seeking an even more sophisticated analysis can refer to additional quantitative methods for assessing the

viability of credit unions under consideration. One such model is Break-EvenAnalysis. Break­Even Analysis examines the extent to which an institution is ccvering its costs and expenses and making actual profits. A credit union can only payout dividends and make investments for future growth to the extent that it is profitable.

QUALITATIVE CONSIDERATIONS

Qualitative considerations provide insight 111to the viability of a credit union that quantitative methods alone cannot achieve. These considerations point to the viability of the institution in the present and in the long term. A credit union that is viable today in terms of profits, assets and cash flows can easily be derailed in the future through defective practices and serious omissions that exist even now and manifest later. Among the qualitative factors to be considered are the following:

• Emphasis on Best Practices

• MarketingActivities

• Technological Sophistication

• Emphasis on Data Security

• Executive Remuneration Policies

• Corporate Governance

• Corporate Social Responsibility

• Provisions for Company Failure &

System.ic Risk

• Signs of Financial Distress

Emphasis on Best Practices

Credit unions are responsible for protecting member deposits and their institutional integrity. Like all businesses, credit un.ions are expected to be consistently current with the best practices in their industry. With.in the scope of best practices there must be a strategic plan that treats

with capital accumulation, growth expectation, total quality management and risk identification. The plan must outline methods to mitigate concerns, manage risks, identifY opportunities and ensure ccmpliance with applicable laws and regulations. Operational best practices include adherence to generally accepted accounting principles, transparency in accounting and internal control policies and procedures that min.irn.ize employee and member risk (WOCCU website, November 192009). Credit unions must also be on the cutting edge of best practices in Human Resource Management, Marketing, Finance and all other areas of operation. Investors can investigate the extent to wh.ich the application of best practices is a priority in a given credit union.

Marketing Activities

The marketing strategies of a credit union represent a critical factor in ensuring long-term viability. Potential investors should assess the priority given by credit unions under consideration to marketing activities. A credit union with a growth focus consistently develops marketing strategies to retain existing members and attract new ones. A growing institution must augment its service offerings in a profitable manner, build relationships with households and increase its membersh.ip and member usage (Hollar 2009). Retaining existing members and attracting new ones will not come automatically, particularly as competing institutions evolve in the dynarn.ic landscape of the financial services industry. The Nielsen Company, a global information and media company, recently conducted a study which showed that advertising can have outstanding positive effects on consumer confidence in the long-term health of a financial services company. As the research company concluded, out of sight can mean out of business (Nielsen News, March 192009).

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Credit unions should also be paying attention to the other aspects of Marketing including maintaining a strong and current research base and being up-to-date with the most sophisticated products and distribution methods. Additionally, a growing credit union recognizes that it must invest heavily in the youth market in order to secure its future membership. Investors should investigate the extent to which these objectives are emphasized by the credit unions being considered. Aggressive marketing strategies are needed to stimulate growth in deposits, which in tum affects growth in other key areas (Richardson 2002).

Technological Sophistication

How au courant with the technology of the day are the credit unions that you are considering? There is now unprecedented opportunity to offer improved service delivery channels, higher transaction speeds and greater convenience to customers as facilitated by the Internet (Bhasin 2005). As noted below, mobile services and contactless debit cards have become important, particularly for youth markets (Hemandez 2009). A credit union that is committed to maintaining a technological advantage demonstrates a predilection for word-class operations and a high level of progress.

Emphasis on Security of Data

Research has revealed that security is the third most important feature (on-line banking was number one) desired by consumers from their financial services providers (Marketing Week, August 6 2009). Fraud diminishes both institutional assets and institutional credibility (Dumbrava et. al. 2008). Is the credit union that you are considering using the most cutTent and effective measures to prevent fraud?

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Effective fraud prevention strategies must be implemented with transparency and should be benchmarked against global standards. This is in the interest of protecting investor funds as well as investor confidence in the present and future. The ISO 17799 is the most highly regarded set of standards for IT data security. Another forum for sourcing best practices is the Information Security Forum (lSF), an international organization devoted to helping businesses to protect their critical data and information. The most salient issues in data security include user registration and user access, privilege management and unattended user equipment (Woodbury 2004).

Executive Remuneration Policies

Executive remuneration in the financial services industry has captured the world's attention in discussions of its impact on perfoLTnance and risk -taking interwoven with the vitriolic debates over the issue of excess. An emerging consensus among leading economies is that the financial system is best served through aligning executive bonuses with long-term performance (Euronews, May 9 2009). However, management contracts should not contain provisions that are likely to cause undue hardship on the credit union.

Corporate Governance

Narine (2010) stated that a deficiency of trust threatens to undermine corporate life. Governance is the system designed to control and distribute power within an organization. The governance structure ofa credit union should ensure that there is integrity, transparency, timeliness and accountability in all aspects of the functioning ofthe organization. To address these issues a code of conduct should be in place (WOCCU 2002). This should encompass the following:

• Conducting the business of the credit union in full compliance with both the letter and the spirit of the law and within established guidelines

• Recognizing that confidentiality of information must be maintained

• . Recognizing and avoiding conflicts of interest

• Protecting credit union property, including assets, information, products and services

• Properly managing personal finances so they do not interfere with the duties and responsibilities of the official or employee

• Treating all credit union employees, members and other stakeholders fairly and with respect

Corporate Social Responsibility

Despite fractions in the literature, Corporate Social Responsibility (CSR) efforts have generally been found to have a positive influence on consumer preference (Brown and Dacin 1997; del Mar Garcia de los Salmones et al. 2005). A credit union that is serious about seeming and increasing its membership must have a community focus and demonstrate a strong commitment to its economic, legal, ethical and discretionary social responsibilities.

Provisions for Company Failure and Systemic Risk

Two key questions must be focused on:

1. Has the credit union that you are looking into responded appropriately

to the lessons offered by the global meltdown?

2. What strategies has it put in place to address systemic risk in the futme?

Globally, suggestions have been made for addressing the risks of company failure and possible futme collapses of the fll1ancial system These include:

• the establishment ofliving wills which would outline the steps thaI the company would take to meet its obligations to its stakeholders

• the introduction offees to create a buffer fund to fulfill obligations

• insmance to provide for institutional failure

• continued monitoring, evaluation and minimization of risk exposure in seven categories: Credit, Interest Rate, Liquidity, Transaction, Compliance, Reputation and Strategy

Signs of Financial Distress

Overall, in making sO\ll1d decisions, relying exclusively on quantitative analysis can be detrimental given that qualitative factors may influence outcomes and signal financial distress. Some of the indicators of financial distress include:

• reduction in dividend payments

• sharp increases in the cost of capital

• inability to obtain further financing

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• inability to meet past due obligations

• poor fUlancial reporting systems

• movement into business areas unrelated to core activities

• failure to keep up-to-date with market intelligence, teclmology, best practices and the like

• failure to control costs

• qualified/adverse opinions from auditors

• use of inappropriate accounting policies.

Investors should enter the decision making process knowing what to look for. The tools and considerations highlighted above can be invaluable in supporting the choice of a credit union. More inlportant, however, is the exercise of good judgment i.n individual decision-making.

Judgment and Consumer Savvy

While the above measures and considerations are excellent for providing support to the potential investor in choosing a credit union, there is a multiplicity of environmental and other factors that could impact that deci sion at any point in time. As such, sound judgment in the context of one's unique circumstances is the fimdan1ental criterion in making a good decision. This involves careful researching of all alternatives, an objective assessment of the strengths and weaknesses of each alternative and the selection of the alternative that gives the maximum benefit in both the short-to-medium- and the long term. At tin1es the process of gathering information can be tortuous and very frustrating. Do not be intimidated by individuals who would block

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your progress in gathering information. Ask questions and persist in getting the answers you need. Make use of websites, annual reports, telephone services and promotional material offered in branches. Discuss your options with trusted persons who are themselves credit union members and who can provide valid insight into actual experiences of the institutions that you are considering. Remember to ask about rates, fees and charges such that you can choose the institution that will minimize your personal costs.

Once you become a credit union member - be an active one! Part of the Movement's philosophy is one member-one vote, so use itl Keep current with the industry - competing credit unions, competing segments, local and global developments and the like. Use your knowledge and influence to ensure that your credit union moves in time with global developments in the industry.

Be aware of the local legislative and regulatory developments . Credit union members in Trinidad and Tobago can expect increased support from the Central Bank in the form of tighter control of the local Credit Union Movement. Most local credit unions have prevailed despite the battering of the current financial crisis and this reflects sound and prudent management on their part. However, the difficulties encountered in the financial system have called for heightened regulatory infrastructure in the system. As such the Government is initiating a new Credit Union Act to be administered by the Central Bank. This Act will regulate the fUlancial activities of credit unions. It will compliment the existing Cooperative Societies Act (1971), currently administered by the Commissioner of Co­operative D evelopment, which guides governance, education and development of credit unions .

Conclusion

In the present global context, credit unions are once again gaining increasing recognition as alternatives (or compliments) to banks. Consumers should avail themselves of the resources available to them to support good

decision making in thi s regard. It is consumers' responsibility to develop financialli!eracy, to stay infonned on money matters, to understand risk management and to use good judgment as a means of making those decisions that will protect their income and wealth in the long tenn.

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