While the banking industry has been making headlines amid talk of failures and $700 billion bailouts, credit unions quietly have been going about their business.
In the Tri-Counties, as in California and many other states, credit unions tend to have less exposure to the housing market than some banks and fewer problems with securitization of loans. Many have been focused on consumer and auto loans, where late payments — not massive defaults — are the biggest problems.
With consumers pulling back and car sales at a standstill, area credit unions say business has slowed. But most are confident they can manage their way through the recession.
Shane Saunders, vice president of marketing at Pacific Oaks Federal Credit Union in Camarillo, said this is the “Golden Age for credit unions,” as he believes they are generally more conservative, more stable and more client-focused than most banks.
“I think a lot of banks are suffering far more than most credit unions, largely due to the complicated loan products they introduced into the marketplace and their heavy reliance upon aggressive mortgage marketing,” Saunders said.
Suzanne Leedale, chief executive officer of SLO Credit Union, said her company is striving to gain new membership but is strong enough financially to weather the storm.
“The next year will be a challenging one, but SLO Credit Union is financially well positioned to withstand the economy,” Leedale said, adding that federal deposit insurance provides the same level of protection for credit union members as the FDIC does for bank customers.
Marketing and communication specialist John Born of Santa Barbara County Federal Credit Union said the nonprofit status of credit unions has really helped strengthen their standing in the financial market. For years, banks have complained that credit unions have an unfair advantage because they do not pay corporate income tax on surplus income.
“I think that in some respects we’re better off than the banks right now,” Born said. “We’ve had a couple more defaults than usual, but everything else looks normal.”
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