Samaha Associates’ CEO Debuts The Art of Negotiation White Paper At CUNA CFO Council
Before Occupy, CU Deposits Outpaced Banks
Monday, July 30, 2012
By Kiah Lau Haslett and David Hayes
Credit unions enjoyed a rapid increase in deposits long before populist rhetoric over bank fees crescendoed into National Bank Transfer Day, a grassroots movement urging consumers to remove their money from banks.
SNL data show aggregate growth of deposits at banks and credit unions from year-end of 2006 remained steady until about the beginning of 2009 before diverging. At that point, credit unions opened up a gap in deposit growth compared to banks, based on 2006 levels.
Credit unions must manage deposits — and members — because they are closely linked to the net interest margin by which the institutions make money. The main levers a credit union can pull to manipulate income are the interest paid on deposits and the interest charged on loans, a challenge in a constrained lending environment and a flight to safety.
The national shift to a net-savings country from a net-spending one has meant there are, in general, more deposits at all financial institutions, said Adam Denbo, credit union consultant and managing partner at Samaha & Associates. Credit union advertising after 2008 and prior to the fall of 2011 may have positioned them to gain members as individuals searched for an alternative to banks, he added.
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