n the ever-present competition for market share between banks and credit unions, the misfortunes of one side are usually viewed as the fortunes of the other: More restrictive membership rules for credit unions are good for banks; tougher capital requirements for banks are good for credit unions.The article continues by telling its readers that an estimated 2,300 Credit Unions will need "fresh capital" in the next few years. Since, there is a lack of options for raising those funds, weaker Credit Unions may be compelled by the National Credit Unions Association (NCUA) to merge with healthier ones.
But the current turmoil in the credit union world—where multiple corporate credit unions are on life support and the retail credit unions that own them are anxiously watching their capital ratios—may turn out to be bad for both banks and credit unions.
Consolidation is already underway. Last year, NCUA arranged 56 such mergers. However, it's not just forced mergers either. Some "healthy" Credit Unions are voluntarily choosing to merge with each other. For example two Credit Unions that I was a member of chose to merge last year. The NCUA approved the merger in October (2009), the membership of both institutions approved it in November (2009) and the deal was complete late last month (May 2010). The combined credit unions that merged selected Quest as their new name, creating the state’s fifth largest CU with $225 million in assets.
In picking the moniker, management said it sought out a brand that reflects "a search for a name that would bond the two organizations together and speak to their shared pursuit of excellent member and product service."
In an unusual twist, Quest is operating with co-presidents/CEOs, Gary Colcher and Vickie Hurt.
- Credit Union Times
Vickie Hurt told the Credit Union Times that both Credit Unions were "healthy, well-capitalized and with strong membership bases, so the consolidation wasn’t required."
I tried to contact the co-presidents and ask them, if they were both healthy, why did they decide to merge. I as a member of both had encouraged a merger for several years, but I wanted to know why the boards made this decision. However, neither was available for comment before posting time.
As the Credit Unions merge and get bigger they are becoming more competitive with community banks. Community bankers say they have no problems with small credit unions that stick with serving specific member groups. They say that their problem is with the large credit unions that advertise aggressively, while enjoying a tax advantage over banks.
"We see the credit unions we are competing against already being very competitive across all the products we offer as a community bank," says Robert R. Jones 3rd, president of United Bank in Mobile, Ala. "If they are going to get to a certain size, the viability of the credit union charter needs to be reconsidered."
- US Banker
I personally think it's good that Credit Unions are taking care of themselves and shaking out the weak among themselves. It is important that we as the consumers of financial products that we place our trust in strong, viable financial institutions. No mater if they be Credit Unions, Banks or Savings and Loans.
---
go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think.
Sponsor This Post(via PayPal) and Replace This Text.
follow me on Twitter
No comments:
Post a Comment