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.