Credit Unions Put Their Money Where Their Mouths Are

March 4, 2014 at 8:10 am Leave a comment

Today brings further evidence that credit unions not only talk the talk when it comes to member value, but walk the walk. 

According to an annual survey conducted by about 72% of the 50 largest credit unions offer free checking accounts with no strings attached.  An additional 24% of these institutions have free accounts for customers who meet certain conditions.  In contrast, according to the survey, only 38% of the largest banks offer free checking accounts, a big drop from the 65% that offered them in 2010. 

You want some more good news?   Fees at credit unions are a lot lower than those at banks.  Overdraft fees are a little less than $6 cheaper and our charges for using an out-of-network ATM are $0.50 to $1.00 cheaper on average. 

Banks love to argue that as credit unions grow larger they become indistinguishable not-for-profit competitors.  But these statistics show yet again that simply isn’t the case. 


On Balance Another Positive Year For Credit Unions

NCUA released statistics for credit union growth in the fourth quarter of 2013 and grudgingly admitted that credit unions ended the year with positive economic returns, even as it continued to warn of interest rate risk.  Among the most noteworthy achievements were that loans grew nearly 8% in 2013 compared to 2012.  In fact, loan products ranging from auto loans to pay day lending alternatives posted impressive gains last year.   As a result, the industry loan to share ratio of 70.9% reached its highest level since 2010. 

Now for the bad news.  The return on assets stood at 78 basis points, down from 80 basis points at the end of the third quarter and 85 basis points at the end of 2012.  NCUA also noted with alarm what it describes as a long-term investment surge.

NCUA has been warning of impending interest rate risk for almost five years now.  With the exception of a brief spike in mortgage interest caused by confusion over when the FED would start tamping down its bond buying program, interest rates have remained near historically low levels.  In addition, the Fed has given no indication that it plans on raising interest rates any time soon.  Eventually, interest rates will rise but every time I hear NCUA warning credit unions of this impending risk, I wonder what NCUA’s alternative investment strategy is for credit unions.

Entry filed under: Economy, General, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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