fiscal 1991 -- compared with a profit of $31,456 the year before.

The loss was due mainly to increased costs and an increase in cash reserves of $189,000 to $585,000 to meet higher demands for loans to members to cope with the recession.

Although the request for loans increased significantly during the 12 months to December 31, 1991, fewer were granted and there was a net decrease of $72,719 in loans paid out.

Credit Union secretary/treasurer Mr. Calvin Smith said: "We had to turn down a lot of requests. We made about 15 percent fewer loans than we did the previous year.

"We recognised at the beginning of the year that we had to have a cushion to take us through so we had to get cautious about lending and that undermined our strategy for growth.'' "We've felt during this economically difficult period that we should be attending to the needs of the people rather than concentrating on the growth of the Credit Union itself.'' Longer serving members of the Credit Union who applied for loans were given preference over everyone else, he said.

To qualify for a loan, members must have been in the organisation for over six months and must have accounts that have been active over the most recent six months.

Mr. Smith said the year had been an especially tough one for the Credit Union.

"Half our membership is made up of construction and hotel workers and these are two of the industries most affected by the economic downturn,'' he said.

"Add to that the industrial unrest we experienced and, indeed, it was a rough year.'' Mr. Smith was brought into the Credit Union in 1983 to help pull it around following a deficit the previous year of $250,000.

The Credit Union was in serious financial trouble for several years during the 1980s.

For a while, the organisation was operating at substantially below its statutory reserve levels, which are 20 percent of total assets compared with 15 percent for deposit companies.

The Credit Union is technically not a deposit company because it takes in money by selling fully-refundable shares to members and then lending it out to those in need.

Mr. Smith said the reserve level for his Credit Union was "extraordinarily high and unrealistic''.

Despite having to meet this requirement, which the Credit Union did comfortably, registering reserves of 22 percent of assets, he said the organisation's current financial situation was "very strong''.

One of the biggest factors affecting the Credit Union's performance was a 12.8 percent ($56,777) increase in expenses to $498,634 during the year.

Part of the reason for this was a 17 percent pay rise to employees spread over two years which helped push up employee costs from $214,378 to $248,129. On top of the pay rise was the addition of substantial fringe benefits.

"We have to negotiate with the BIU the same as everyone else,'' said Mr.

Smith.

But, as negotiations for the next wage settlement are about to get underway, he said: "There will be no wage increase like that next time.'' While costs were rocketing, revenues increased more modestly by 4.8 percent ($22,886) to $496,199.

During the year, 357 new accounts were added to the Credit Union, a larger than usual growth.

Net assets grew by $137,000 to $3,589,525, less than the organisation's liabilities of $3,624,593.

BIU CREDIT UNION 1991 RESULTS LOSS ($2,435) REVENUES ($496,199) EXPENSES ($498,634) ASSETS (3.59 M) LIABILITIES ($3.6 M) MR. CALVIN SMITH -- `It was indeed a rough year.'