Credit unions are enjoying historic high membership and welcomed 1.3 million new customers in 2011, according to the National Credit Union Administration.
About 424 of the nation’s 7,324 credit unions were located in California as of December 2011, with nearly 9.6 million of the country’s 92.6 million credit union members living in the state.
These consumers are enjoying the many benefits that credit unions offer, including fewer fees and better rates than many traditional banking institutions.
“Credit unions are not-for-profit financial institutions that are owned by their members,” said Paul Yang, CEO of Premier Community Credit Union, with service centers in Stockton, Lodi and Manteca. “As a result, all ‘profits’ are returned to members in the form of lower loan rates, higher deposit rates and lower fees.”
“Because we are a financial cooperative wholly owned by our membership providing services solely to our owners, we are afforded the opportunity to make decisions based on our member shareholders instead of unknown stakeholders from Wall Street,” said Michael Duffy, president and CEO of Financial Center Credit Union, which has branch locations in Stockton, Manteca and Lodi.
Most credit unions also offer unique products, such as a signature, personal or unsecured loan, which is based on a member’s good credit and requires no collateral, Yang said.
“And because the members are also ‘owners,’ credit unions look for more ways to approve loans than traditional banks,” he said. “Credit union products are also very straightforward with no hidden fees. For example, many credit card issuers charge a higher interest rate for cash advances, or a penalty rate if a payment is late, but most credit unions do not.”
“As a member-owned cooperative, our members have a say-so in the credit union’s management through their representation on the board of directors, who are elected by the members and are unpaid and volunteer their time,” said Dan Robertson, CEO of Eagle Credit Union with offices in Lodi and Stockton. “Our focus is on member service, not maximizing profit. Unlike banks, credit unions return surplus income to their members in the form of dividends. Additionally, through the volunteer support of our members, we can hold down expenses and pass along those savings in lower account fees to our members, in addition to better rates on deposits and loans.”
Credit unions also support the communities that they serve.
“We made more than $64 million in loans to our owners last year, investing local savings into local loans to meet the needs of our member owners,” said Duffy.
People often have a few misconceptions about credit unions. For instance, the word “union” is sometimes misunderstood.
“We are not a labor union and union membership is not a requirement,” said Robertson.
Membership requirements vary among credit unions. In general, members of each credit union must share a common bond, such as the same workplace, church, fraternal organization or neighborhood. Membership in Financial Center Credit Union includes employees of more than 160 employers in the area, practicing Catholics of the Stockton Catholic Diocese, and the families of Financial Center members.
Premier Community Credit Union has a community charter that allows anyone who lives or works in San Joaquin County to open a basic savings account to establish membership.
Eagle Credit Union accepts members who live or work regularly in San Joaquin or Stanislaus counties, U.S. Post Office employees who work in Stanislaus, Tuolumne, Calaveras or San Joaquin counties, employees of the city of Lodi and other select employee groups, and the families of existing members.
Perhaps the biggest misconception about credit unions is that they don’t have many ATMs or branches. In reality, most credit unions are members of CO-OP Network, which has nearly 30,000 ATMs nationwide – including almost every credit union and all 7-Elevens – and more than 6,000 branches and kiosks through shared branching. “Our members’ access to their funds is not restricted to just a local branch,” emphasized Robertson.
“Most members have access to thousands of ATMs located throughout the United States. Our members can use nearly 30,000 ATM locations nationwide and save money, because they’re all surcharge-free.”
Future indicators are favorable for local credit unions and their customers.
“So far, the business in 2013 looks promising,” said Yang. “Premier Community Credit Union’s primary measurement for success is the financial wellbeing of our members.
Therefore, if the economy improves, so will the lives of our members. Home values have stabilized in San Joaquin County, the unemployment rate has improved over the past year, and consumer confidence is slowly improving. As our members thrive, so will we.”