WASHINGTON—Credit union branches are not direct substitutes for bank branches, especially in rural America, according to one person’s analysis of a recent report by the Federal Reserve.
As CUToday.info reported here, the study examined the closure of bank branches between 2012 and 2017. The report found the number of bank branches declined by 7% across all counties during the time period studied, stated Keith Leggett, the former senior vice president and senior economist at the ABA, in his analysis.
While urban communities lost more branches than rural areas, the study noted that the effect of branch closures tends to be magnified in rural areas.
Participants in listening sessions described instances in which credit unions moved into or expanded their operations in the community in response to the closure of the local bank branch. Participants who used a credit union commented that credit unions were able to meet some of their financial needs, Leggett said.
Where CUs Don’t Meet Needs
“However, some participants noted areas where their local credit union did not meet their financial needs. For example, participants raised concerns about ‘a lack of robust small business account and credit products, overly restrictive lending policies, a lack of direct deposit services for employers, and low maximum cash withdrawal limits,’” Leggett said.