If more people transfer their accounts to credit unions it couldbe a mixed blessing for some credit unions. However, that's achallenge credit unions would be glad to worry about.

Credit unions may have to find ways to invest the money theywould receive from new deposits that could come on or around theso-called Bank Transfer Day on Nov. 5. That could be a challenge becauseof low interest rates and caps on business loans, according toseveral industry experts.

“The new deposits push credit unions in a tough position becausethere is an increase in liquidity with nothing to invest in,'' saidformer NCUA Board Member Geoff Bacino.

But former NCUA Chairman Dennis Dollar said since most of thenew deposits would be in the form of checking accounts, it's a netplus for credit unions.

“Those aren't high-balance accounts and are the most profitableaccounts that credit unions have because of the fees theygenerate,'' he said. “Also, any increases that credit unions seewill take place gradually because those accounts are the hardest totransfer because of changes that have to be made when designatingdirect deposit and automatic bill pay.”

CUNA Chief Economist Bill Hampel agreed with Dollar that anyincrease in deposits will come gradually. But Hampel said that thechallenges to credit unions won't come in the form of increasedliquidity as much as additional strains on their operations.

“It's a nice problem to have and that's where they could seechallenges for their staff,'' he said.

Hampel added that if credit unions have an increase in assetsbecause of new deposits, it doesn't have to negatively affect theircapital ratio.

“You can calculate the ratio either by dividing the currentamount of capital by the current asset size or by dividing thecurrent capital level by the average asset size of the last fourquarters, whichever is more advantageous,'' he said.

NAFCU Chief Economist Tun Wai advises credit unions thatonce they get the new deposits, to redouble their efforts toprevent people from switching financial institutions.

“People move from financial institution to financial institutionconstantly and you have to makle sure you develop the right relationship with members, and that will persuade them tostay with your cr4edit union,'' he said.

Want to hear more about Bank Transfer Day? Click on thearrow below to hear Senior Reporter David Morrison interviewed onMadison, Wis., radio station WTDY's “Everything at 5″show.