The credit union deposit portfolio is in flux. The industry’s loan performance has gone gangbusters the past several quarters, driving the loan-to-share ratio to its highest point in the past decade. In addition, continued raises to the fed funds rate has required strategic conversations on product pricing.
This year, CreditUnions.com readers keyed into deposit stories. Here are eight of your favorites, based on page views.
8. A Strategy To Score Swipes And Savings
A year-old debit swipe and savings plan at Community First Credit Union of Florida ($1.6B, Jacksonville, FL) offers financial wellness for members and additional income for its own bottom line. The north Florida credit union launched Save My Change in October 2017. The opt-in program rounds up a member’s debit transactions to the nearest dollar and deposits those pennies and nickels and dimes into a savings account. Such programs have been around for some time, but Community First offers a twist.
7. A Deposit Strategy 5 Years In The Making
For the past decade, the federal funds rate has hovered at or near 0%. This is the lowest rate in the history of the Federal Reserve and is the result of the central bank ‘s efforts to encourage spending, borrowing, and investment to bring the United States out of the Great Recession. Consequently, borrowers have enjoyed an unprecedented run of low loan rates. Consumers have grown accustomed to really low mortgage rates, auto loan rates, and credit card rates, says Todd Harris, CEO of Technology Credit Union ($2.7B, San Jose, CA). That ‘s about to change. But Technology has been prepping for this rising rate environment for the past half-decade. Find out how.
6. A Role For HSAs In Deposit Growth
Health savings accounts comprise approximately 9.6% of the deposit portfolio at Everence Federal Credit Union ($195.7M, Lancaster, PA). That was the fifth-highest percentage of all credit unions in the United States for the first quarter of 2018. What makes this product such a large part of Everence’s operations? To begin with, it has an innovative design mixed with what credit union CEO Kent Hartzler calls a newfound legitimization as a long-term savings vehicle.
5. An Account Of Ownership Benefits
Member loyalty is adding up at one Oregon cooperative thanks to the wild success of the Ownership Account, a non-transactional savings account that comes with every membership at Rogue Credit Union ($1.5B, Medford, OR). The account rewards members for their participation in the Rogue Rewards benefit programs that include cash back on credit cards, rounding up debit card charges, e-statement sign-up bonuses, youth account incentives, and sweeps from other deposit accounts. Members can keep their money in the Ownership Account as long as they want and currently earn a return of 3%, well above market rates but once they take it out, they can’t re-deposit it. That’s not a bad incentive to nurture a nest egg.
4. A Great Rate To Fill The Deposit Gap
In the third quarter of 2015, the loan-to-share ratio at Day Air Credit Union ($392.4M, Kettering, OH) reached 104%. The Buckeye State credit union ‘s fast-growing indirect loan operation had helped position it at No. 133 out of more than 5,600 institutions in the nation. Nearly three years later, Day Air ‘s ratio has moved closer to national average primarily due to slowing indirect loan growth and higher than average share growth. Still, the credit union ‘s appetite for deposits remains. That ‘s partly why Day Air introduced its high-rate, high-balance Best in the Miami Valley Certificate on Aug. 1 of this year.
3. The Great Credit Union Deposit Swap
Two Texas credit unions are $26 million and 600 members into a product partnership that combines a central cooperative principle with a critical business need. The product, a bundle of share certificates, allows University Federal Credit Union ($2.4B, Austin, TX) to offer favorable savings rates to members and supplies Credit Human Federal Credit Union ($3.1B, San Antonio, TX) with new cash for lending. And whereas credit unions have a long history of sharing resources loan participations are a good example the rules and regs for loans and deposits are different. Find out how they did it.
2. The State Of Prize-Linked Savings Accounts
Americans need to save more. But it’s difficult to encourage people to consistently contribute to a nest egg for years on end. For some, it’s hard to prioritize less pressing long-term goals when there are current expenses to cover. For others, a better savings habit means unwanted lifestyle changes. Another issue: Saving money isn’t fun. Can credit unions make savings fun? According to supporters of prize-linked savings, the answer is yes.
1. How Many Basis Points Does It Take To Keep A Member?
Fort Knox Federal Credit Union ($1.5B, Radcliff, KY) had approximately $180.5 million in money market account balances as of the second quarter of 2018 and the Bluegrass State credit union would like to keep it that way for the third. “In the past five quarters, Fort Knox ‘s money market account balances have declined by approximately $11 million, a function of the new interest rate environment” says credit union CFO Jake Darabos. “For credit unions, the Federal Reserve’s rate hikes can have a large impact on their deposit portfolios and Fort Knox is no exception. Here’s how it’s fighting back.”