If more people transfer their accounts to credit unions because of Bank Transfer Day. it could be a mixed blessing for some credit unions.

Credit unions have to find ways to invest the money they receive from new deposits on or around Bank Transfer Day on Nov. 5. That could be a challenge because of low interest rates and caps of business lending, according to several industry experts.

“The new deposits push credit unions in a tough position because there is an increase in liquidity with nothing to invest in,” said former NCUA Board Member Geoff Bacino.

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

“Those aren't high-balance accounts and are the most profitable accounts that credit unions have because of the fees they generate,” he said. “Also, any increases that credit unions see will take place gradually because those accounts are the hardest to transfer because of changes that have to be made when designating direct deposit and automatic bill pay. Bank Transfer Day isn't the brainchild of a credit union marketing executive or a creative director of an advertising agency. Like other protest movements, it started in the blogosphere.

It was conceived by Kristen Christian, a 27-year-old owner of the Le Spec Gallery in Los Angles. She said in an interview that she wanted to “get a message out to young people about choices” but that her online role is being wrongly misconstrued as “some kind of terrorist.” She said since her proposal to close her Bank of America account and switch to a credit union was picked up on the viral blogs, she received numerous calls “from many credit union people–tellers and managers” as well as trade organizations about her cause.

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

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

Hampel added that if credit unions have an increase in assets because of new deposits, it doesn't have to negatively affect their capital ratio.

“You can calculate the ratio either by dividing the current amount of capital by the current asset size or by dividing the current capital level by the average asset size of the last four quarters, whichever is more advantageous,” he said.

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

“People move from financial institution to financial institution constantly, and you have to make sure you develop the right relationship with members and that will persuade them to stay with your credit union,” he said. Credit unions and their trade associations have been stressing in their marketing materials that they offer better rates and lower fees than banks. In addition, because of expanded ATM networks, credit unions can compete with banks in terms of convenience.

“ With banks announcing more fees and tougher fee exemptions, they have partially tried to justify these measures by emphasizing the scope of their ATM and branch networks,” said Stan Hollen, President/CEO of CO-OP Financial Services. “However, credit unions cooperate with each other in a way banks will not, so credit unions can offer the same level of convenience, along with service that survey after survey confirms is superior to banks in consumer satisfaction.”

Coasthills FCU, President /CEO Jeff York, said they would welcome additional members but haven't increased their marketing efforts yet. “We have made a decision yet about whether to increase our outreach to tie in to the Bank Transfer Day. But we know that many people realize that we are one of the choices they have when deciding on financial services providers and we are very appealing to a growing number of consumers,” said York, whose credit union is based in Lompoc, Calif.. and has assets of $630 million.

A Facebook page for Bank Transfer Day said that “together we can ensure that these banking institutions will ALWAYS remember the 5th of November!! If the 99% removes our funds from the major banking institutions on or by this date, we will send a clear message and give the 1% a taste of the fear that we experience every day when we aren't able to pay for our rent, food, medication, utilities, student loans, etc.”

Christian said she came up with the idea after becoming motivated to “do something to help educate” those of her generation and others on megabank practices after seeing TV reports of New York police cracking down on Occupy Wall Street protesters. She added that she wants to put her money in a credit union rather than a community bank because banks “have a tendency to get merged by the larger banks.”

Jim Rubenstein contributed to this story.

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