Old-fashioned credit unions are more relevant than ever.

I was reading this article that trumpeted the successes of “old-fashioned” banks and I couldn’t help but think that credit unions are all over this.  The article identifies how certain banks have played it safe in current economic markets. 

These banks have maintained lending standards.  Banks that have reduced or lowered lending standards to try to improve profitability have suffered.  The banks identified in this article did not give in to that temptation.  Credit unions do one better by maintaining their underwriting standards while still managing to reach out to the underserved.

These conservative banks have exited or stayed out of the residential mortgage market.  Conversely, credit unions have been able to stay in the residential mortgage market without getting involved in subprime lending.  Today a credit union is one of the best places where a consumer can go to obtain a mortgage.

Another tool of the conservative banks is to keep costs down.  Credit unions keep costs down so they can give back dividends to members.  It’s how credit unions are structured.  Credit unions are legendary for watching the bottom line.  It is part of being a nonprofit financial cooperative.

Credit unions own consumer lending.  They are designed for it and they do a terrific job at it.  Given today’s lending environment and the absence of trust in that environment, credit unions are more important, more competitive and more relevant than ever.

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3 thoughts on “Old-fashioned credit unions are more relevant than ever.

  1. Good post…and I agree with you that CUs are a great (trusted) resource for financial products. But there’s a growing “buzz on” out there with many of the community bankers saying “it’s time for us to get back into home loans”. Community banks were virtually untouched by the sub-prime mess…much the same as CU’s. And a major technology player has developed “instant approval” software specifically for community banks to use for their “instant loan approvals”. You might recognize the name. Dexma.com developed the software behind the “desktop underwriter” Prime Alliance uses. And that technology belongs to them. Check out Dexma’s site and you will see that Dexma’s 2008 focus seems to be aiming for the community banking arena.

    I do have to say that community banks have the potential to convey a very compelling “local” story to marketplace. Wasn’t that a local S & L that was at the center of the “heart wrenching” tale in the movie classic “It’s a Wonderful Life”? Maybe it should have been a credit union, but it wasn’t. Bottom line to me is that the CUs better get busy and position themselves to take advantage of this “homeownership” window of opportunity. There’s always competition out there, and many of the community bankers seem to be warming up their marketing efforts.

  2. I am in complete agreement. O.K….I am in Canada. But guess what….your subprime fiasco is affecting our major banks up here too! Why? Because in the last 4 years our three big majors did what? THEY opened up branches in the US. So that they could get into the subprime bonnaza! And lost their butts! Now their share prices are dropping up here as profits are down, due mainly to their subprime losses in the US. Not so our little Credit Unions. They just keep chuggin’ along…..

    Nice article!
    Mike

  3. Hi,
    To be honest, there’s never just one “best” deal. I usually end up with a short list of mortgages that look good. It will then be down to understanding the small print work out their differences and making a final selection. But don’t forget, every mortgage deal has its own pro’s and con’s so the choice is never clear-cut.

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