Publications Nationwide Recognizing CU Growth

BOSTON AND KANSAS CITY, Mo.-Major publications from Boston and Kansas City, Mo. published articles recently citing credit union growth, which they attribute to bank mergers and credit union structure and philosophy. The Boston Globe noted in a July 28 article Community Credit Union’s opening of a new branch to attract more of the area’s significant Greek population, as well as Saugus Federal Credit Union, which is planning a new $1.5 million headquarter building, and Seaport Credit Union, which will open its first branch outside of Salem in the coming year. The article stated, “The battle for market share has been driven by big changes in the state’s banking industry. Community banks, such as First and Ocean National Bank of Newburyport and WarrenBank of Peabody, have been gobbled up by giant Banknorth of Canada. Bank of America, which recently bought FleetBoston, now has more than 1,000 branches and ATM kiosks in Greater Boston. As nonprofit cooperatives run by their members, credit unions are well-positioned to attract new customers looking for community-based alternatives to big banks, an industry backer said.” Massachusetts Credit Union League CEO Dan Egan is quoted in the Globe article as saying, “People used to have a lot of local banks to choose from, but all that has changed. In many cases now, a bank changes its name four times. When they change their names, they change the rules.” Banks’ claims of an unlevel playing field are cited in the story. Egan also points out that credit unions’ marketshare is still a small percentage. The Kansas City Star reported on a study by the Federal Reserve Bank of Kansas City that found credit unions beat banks in deposit and asset growth from 1994 through 2004. In that time, credit unions grew their assets 8.4% annually, while deposits were up 8.1%. Banks, on the other hand, showed asset growth of 7.7% and deposits grew 6.9%. At the same time, credit unions’ return on assets was lower than that of the banks. “That is not surprising,” the Star quoted the study as saying, “because as not-for-profit cooperative entities, earnings performance may not be a credit union’s first priority.” The study’s author also states that deposits at credit unions may have grown more rapidly as depositors sought higher rates during the recession. [email protected]