Calhoun County credit unions are reporting significant growth in membership and assets for the past year. The local gains are part of a trend in credit union growth across the Southeast, which some experts attribute to customers’ frustration over increasing fees at banks.
The League of Southeastern Credit Unions, the trade association for Alabama and Florida credit unions, recently announced Alabama credit unions experienced record growth in membership and assets in the first quarter of the year. According to the association’s report, Alabama credit unions added 20,000 new members in the first quarter to reach a record 1.8 million total. Assets also reached an all-time high of $17.5 billion.
“Our growth, deposit and asset-wise, has been phenomenal,” said Curt Sasser, president and CEO of Fort McClellan Credit Union.
Sasser said deposits have grown 6 percent so far this year, adding to the 15 percent deposit growth at his credit union in 2011. Also, membership at his credit union has grown by 500 people so far this year. Fort McClellan Credit Union currently has around 21,116 members.
Sasser attributes the growth mainly to a customer backlash against rising debit card, checking and overdraft fees at banks.
“That has driven them to credit unions,” Sasser said. “Usually loan rates are a little bit lower at credit unions than other institutions and credit unions get a little bit better return on investments.”
According to the Pew Charitable Trusts, a nonprofit research organization, and the nonprofit advocacy group Consumer Federation of America, banks’ checking account overdraft fees have jumped over the past two years.
The two groups have called on regulators to press banks to be more up-front about their fee policies.
Shelley McLaughlin, marketing coordinator for First Educators Credit Union, which has branches in Anniston and Jacksonville, agreed with Sasser that certain banks’ practices have driven customers to credit unions.
“The reason we think that is so is because we offer lower fees, no debit card fees and free checking,” McLaughlin said. “Members are getting upset with all the fees.”
Though a relatively smaller credit union, First Educators has still made gains this year, increasing membership by 391 people to date, for a total of 17,000 members. The credit union increased membership by 15 percent last year.
“I don’t think it’s a fluke at all,” Andreas Rauterkus, associate professor of finance at the University of Alabama at Birmingham's school of business, said of recent credit union growth. “It’s kind of a new movement in customer awareness.”
McLaughlin said her credit union’s customer service has also played a part in its recent success.
“We treat people on an individual basis,” McLaughlin said. “We look at why someone has a bad credit score and then try to work with them for a loan. People in banks will just look at the credit score and say no.”
Unlike banks and other financial institutions, credit union members own a portion of their credit union and they elect their own board of directors.
“Credit unions in general have been lauded for having low fees … and it’s because we don’t have stockholders,” said, Kenneth Reynolds, president and CEO of AOD Federal Credit Union, which has five locations in Anniston, Oxford and Bynum.
Rauterkus said depositor ownership has made credit unions more attractive in recent years, particularly because of the recession.
“Banks have to maximize value for shareholders, who may not have any money in those banks, but credit unions only have to please their members,” Rauterkus said. “And my research and others’ has shown that people look at credit unions as a safe haven during times of economic crisis. People think they are closer to their money.”
Like other credit unions in the area, AOD has grown in members and assets, Reynolds said. He said AOD’s membership has grown 5 percent so far this year, for a total of more than 30,000. Deposits have grown by 10 percent so far this year, he added. Also, AOD expects to open its latest branch in Jacksonville in July and has purchased property in Alexandria to possibly build a branch there.
Shad Williams, president and CEO of Cheaha Bank, said while larger national banks have suffered losses in recent years, community banks like his have been relatively successful. Williams said his bank’s total assets are around $183 million, an increase from the $171 million in assets it had in December.
“The difference is the big national banks make large portion of their incomes off of fees,” Williams said. “Community banks make money off of the interest on deposits and what we lend money out for … our fees are pretty skimpy.”
Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star