Credit Unions Succeeding Despite Credit Crunch

As banks struggle, credit unions are seeing more customers.

Call center operators at Charlotte Metro Credit Union have been swamped with an influx of new customers.

CMCU representatives told Eyewitness News there’s been a 40-45 percent increase in membership applications. Marketing VP Nathan Tothrow said it all started Sept. 29, the day the Wachovia-Citigroup merger was announced.

Tothrow said new customers have been specific about why they made the switch.

"It usually comes back to fees, value, sometimes its convenience,” he said.

To become a credit union member, CMCU charges a $25 fee to open an account with no minimum deposit. If you bounce a check, there's a $30 one-time fee. Banks charge that or more; plus a daily fee while the check is outstanding.

Low fees and friendly customer service are what attracted Michael Anderson.

"It’s nice. We know some people behind the counter. We good to go,” he said.

Customers like Anderson have access to car loans, mortgages and home equity lines.

It’s helped push the credit unions revenues to $181 million. That’s up from $131 million three years ago.

And while banks have pulled back on lending, Tothrow said that's not the case at CMCU.

"As a matter of fact we're in a unique position where we are encouraging our staff to lend more,” Tothrow said.

The credit union not only has money to lend, but also pays higher money market rates. Credit unions pay 3.06 percent compared to 1.4 at Bank of America for deposits of $10,000.

But while credit unions are riding high now, UNC Charlotte finance professor Dr. Tony Plath warns that could change quickly.

“The danger in this market, what we're seeing now as the recession progresses and as the employment rate goes higher, credit unions will be affected in terms of asset quality," Plath said.

What that means is credit union customers who lose their jobs will be unable to repay their loans. That could impact the credit union's bottom line, making them less attractive.

But recession or not, CMCU is planning on expanding.

"We're looking to build a new office headquarters across the parking lot so that we can house some of the staff we're adding today,” Tothrow said.

National Credit Union Administration