Healthy Credit Unions Mean Healthy Communities
By any measure, 2011 was a good year for credit unions.
Membership in credit unions across the country jumped to a record 91.8 million, an increase of more than 1.3 million, according to the National Credit Union Administration. In Michigan, 25,000 people joined one of the state’s 312 credit unions during the fourth quarter alone, the largest jump in five years. Locally, LAFCU, which has been an integral part of the Greater Lansing community since 1936, serves more than 50,000 members and has more than $500 million in assets. In 2011, LAFCU welcomed over 4,000 new members to its wide array of financial products and services.
Deposits are up. Consumer loans are up. Small business loans are up. It’s all good news; but if you’re not a credit union member, you may be asking what any of it has to do with you. The answer is: plenty.
When credit unions lend more, consumers buy more homes, cars, campers, boats, RVs and motorcycles. Entrepreneurs open new ventures, while existing businesses expand facilities and inventories, which leads to higher profits. Higher profits, of course, often mean more hiring. And when more people are working, demand for consumer goods increases, and around and around it goes.
That’s the kind of healthy business cycle that will ultimately help Michigan turn around, and LAFCU is thrilled to be a part of it.
The industry’s growth is neither an accident nor short term.
In his March “Priority Report,” David Adams, CEO of the Michigan Credit Union League & Affiliates, listed strong earnings and growth in business, used auto and credit card loans among the factors signaling “great opportunities for credit unions in the years ahead.”
“Credit unions,” he says, “are stronger than they have ever been with high levels of net worth and earnings, lots of liquidity and improved asset quality.”
Much of the surge of interest in credit unions has been attributed to negative public reaction to Bank of America’s plan (since dropped) last September to charge customers a $5 monthly debit card fee. Outrage over bank fees, coupled with lingering anger from the bank bailouts, helped spawn November’s National Transfer Day, a phenomenon that started as a Facebook page entry and swiftly grew. While estimates vary widely, it’s clear that hundreds of thousands of consumers switched from banks to credit unions last fall, taking hundreds of millions of dollars with them.
Everyone likes saving money, and as the Michigan Credit Union League & Affiliates points out, 4.5 million Michigan credit union members save more than $200 million a year in lower fees and better interest rates.
Small business owners, in particular, have taken notice. Credit unions are becoming strong commercial lenders, especially in commercial real estate financing. According to a recent article in MiBiz.com, credit union business loans to members have more than doubled since 2007 and “total business loans to members across the state topped $1.15 billion, up from $1.01 billion in 2010.”
That’s no small thing. As Fred Upton, a U.S. representative from St. Joseph and a longtime credit union member, said earlier this year: “While conditions in financial markets have improved, access to credit remains difficult for many small businesses and entrepreneurs that depend on financial institutions for such funding.”
Credit unions are increasingly helping to provide easier access to credit for businesses and consumers, and that’s a good thing for Michigan, whether you’re a credit union member or not.
Robin Frucci is CEO of LAFCU, a local credit union serving Ingham, Eaton and Clinton counties since 1936.
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