Another View -- Gerald Dumoulin: Banker attacks on credit unions really target consumer choiceGERALD DUMOULIN
March 28. 2014 11:58PM
NEW HAMPSHIRE'S bankers want a greater share of the financial services market. That's quite natural and that's what people who run successful businesses do, but it should not be done at the expense of consumer choice.
The New Hampshire Bankers Association is spending time and money on an effort to restrict the financial choices that the people of New Hampshire have when it comes to choosing where to bank. Rather than winning the business with outstanding products and services, they are wasting time, money and energy trying to impede credit unions, which they view as a competitive threat.
A March 22 Union Leader article by Dave Solomon titled "NH banks to challenge credit unions' tax status" gives air to those complaints. The banks' recent push to tax credit unions relies on a study commissioned by the bankers, which shows that credit unions are growing faster than banks in New Hampshire. It then attempts to show that this growth is a function of the credit union income tax exemption, and it uses the questionable measure of branch location to attempt to demonstrate that credit unions aren't serving low-income New Hampshire residents.
The study connects tenuous points with thin threads. What the story fails to mention is that while bankers are concerned about credit unions taking over the financial services space, New Hampshire credit unions have just 14.7 percent of the total market share of deposits of financial institutions, compared to 85 percent for banks. Credit unions are also locally owned and operated. In contrast, out-of-state banks control 56 percent of deposits of financial institutions in the state, an increase of 12 percent over the past two decades.
The bankers' own study shows 45 percent of the deposits in the top 25 banks and credit unions are held by foreign-controlled banking companies such as Citizens (Royal Bank of Scotland), TD Bank (Toronto Dominion), and Santander. Add the 17 percent that Bank of America has and the percentage climbs to 62 percent.
Much of the out-of-state banking growth is attributed to larger banks acquiring smaller banks over the years. We have no issue with out-of-state banks serving New Hampshire consumers, but those same consumers should have the choice to bank with a local credit union.
There is no question that New Hampshire credit unions are growing, but they are growing because they meet members' needs. Credit unions are there for New Hampshire residents in the good times and the bad. Credit unions did not alter their underwriting policies during the economic downturn, like many other financial institutions, to serve only the best of credit applicants. New Hampshire credit unions have one of the highest loan growth percentages in the country, at 10.39 percent, because they work hard every day to make affordable credit available to members. That benefits not only the members, but also the economy of New Hampshire.
Through cooperative ownership and efficient operation, credit unions help their members save money. Credit union member households in New Hampshire saved an average of $226 over those who did not use a credit union for the period between September 2012 and September 2013.
Reporter Solomon quotes the bankers as saying that this movement toward credit unions "may be good for a group of mostly well off consumers in the short term."
Our data show that more than 40 percent of New Hampshire consumers are members and more are joining credit unions every year. We are certainly not geared to a small slice of the population.
Local cooperative ownership keeps credit unions focused on Main Street, not Wall Street. Consumers get this.
They understand that credit unions look out for their interests, not the interests of shareholders.
In a study conducted in January of this year, a group of New Hampshire voters was asked which type of institution was owned and operated for the benefit of its members or customers - 75 percent indicated credit unions, and 7 percent indicated banks. When asked which kind of institution looks out for the "little guy," 69 percent chose credit unions and 5 percent chose banks.
Credit unions do not want to put banks out of business. We believe in a strong banking system, but New Hampshire also needs a strong credit union system. And most importantly, consumers need choice. We urge the New Hampshire Bankers Association to stop worrying about credit unions and our 14.7 percent of the financial institution deposit market and start worrying about serving their customers.
Gerald Dumoulin is CEO of Guardian Angel Credit Union in Berlin and chairman of the board of the New Hampshire Credit Union League.