A Solid Standing With Consumers and Congress

CU membership and financial growth are on the rise.

April 1, 2012

With a full quarter of the year under our belts, I’m more convinced than ever: Credit unions are on the rise.

Our economists already are predicting that by year’s end, credit unions will finally start seeing earnings rivaling prerecession levels of 90 basis points, after having endured so many years well below that number.

And last month, we learned that credit unions added more members in 2011—1.3 million—than they added in any of the previous five years.

Despite the worst recession in the past 80 years, credit unions came through strong financially. While other financials struggled to maintain capital (some even taking government money to do so), credit union net worth never fell below 9.9%—well above the “well-capitalized” level of 7%. And by year-end 2011, net worth reached 10.2% (nearly $100 billion), fed by net income that increased 41.2%.

But, as important as it is, there’s more than just the financial aspect to the rise of credit unions. We’ve also solidified our standing with consumers and earned much more than a modicum of deference on Capitol Hill.

CUNA research shows that, for the first time, voters view credit unions and banks evenly in terms of the “best place for consumers to keep their day-to-day savings and checking accounts.” For both credit unions and banks, 43% said it was the “best place” for them.

In past years, results were skewed in favor of banks. In 2008, for example, the breakdown was 61% banks and 40% credit unions; in 2004 it was 65% to 37%.

But we believe the gains by credit unions in the past couple of years reflect gains in consumer awareness they made in the wake of the now-rescinded Bank of America $5 debit fee and the publicity surrounding Bank Transfer Day.

Our research also reinforces something we’ve seen for some time: Consumers think banks charge them too much, but they don’t feel that way about credit unions.

Our survey shows that 81% of voters say banks “charge too much for fees and services,” but only 13% said the same of credit unions.

While past results also have shown credit unions faring better than banks in this category, this year’s survey indicates consumers are becoming more deeply entrenched in their negative view of banks and how much they charge.

We’ve also established ourselves as a voice on Capitol Hill when it comes to financial legislation.

Late last year, when the House was holding a hearing on legislation to give bankers regulatory relief, we asked for—and received—a green light to voice our own views of the legislation.

In just about anyone’s recollection, that’s the first time credit unions have been given a seat at the table to weigh in on banker legislation. And, it wasn’t just happenstance. It was the result of long and careful work with lawmakers.

There’s more, of course, but I think these instances highlight the most important thing that has happened for credit unions during the past two to three years: recognition, by both the public and their legislators.

And who gets the credit for this recognition and the rise of credit unions? The men and women who oversee credit unions—the volunteers and staff.

They’re the ones who insist on top-notch service to members. They’re the ones who, every day, work to ensure safe, sound,
and effective operations. They’re the ones who ensure the credit union philoso­phy becomes reality.

Looking toward the next three quarters of the year, we’ll be working with credit unions, their volunteers, and staff to help them realize our economists’ predictions, maintain the confidence and support the public bestows on them, and make sure Congress understands what credit unions need to better serve their members.

BILL CHENEY is CUNA’s president/CEO.