SALT LAKE CITY — In an effort to reassure its members, Beehive Credit Union has promised members that as a bank it will not raise any fees on consumer deposit accounts for at least two years and will keep interest rates on two loans and one deposit account within 0.25% of the average rates on those products at the five largest CUs in Beehive's market.
The loans and deposit accounts include the five-year new car loan, the home equity line of credit, and the one-year certificate of deposit.
The promise accompanies Beehive research, based in part on an article by Peter Duffy, an executive with an investment bank that makes money on the stock offerings of converted credit unions, which shows that converted CUs actually offer higher rates on deposits and charge lower rates on loans than do CUs of over $100 million.
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"The board of directors believes that this research serves to support their opinion that, once converted, Beehive will be able to provide competitive fees and loan and deposit rates to its members," Beehive wrote in its disclosure statement about the charter change.
But the problem is that Bill Hampel, CUNA's chief economist who Duffy cites briefly in his article, contested the thrust of the piece upon which the CU based its position on rates.
In his piece, Duffy claimed that Hampel's research indicated that credit unions had moved from a 15 basis point advantage on money market accounts, compared to banks, to a 250 basis point disadvantage. But Hampel said his research had merely shown that the CU savings advantage had narrowed for a time as CUs had not raised their savings rates as quickly as banks, but the gap had since widened. Hampel also pointed to a body of academic research, much of it peer reviewed by economists, which found that CUs offer better rates on deposits and lower rates on loans on average than do converted credit unions.
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