MASSENA, N.Y.—Credit unions leaders are telling CUToday.info they aren’t hearing many questions yet from members in the wake of the failure of two large banks, but they are also staying close to the matter and ensuring staff are well-versed on what is happening, are updating their respective boards on the soundness of their own organizations, and indicating the news could drive more consumers to CUs.
As CUToday.info reported, after closing the $212-billion Silicon Valley Bank (SVB) in California and the $110-billion Signature Bank in New York, the FDIC and Treasury have announced “similar systemic risk exception” for both banks that will allow all depositors to be mad full, even though in the case of SVB approximately 90% of its deposits were in accounts that exceeded FDIC insurance caps.
Scott Wilson, CEO of $775-million SeaComm FCU in New York told CUToday.info that as of Monday morning the organization had fielded only one question from members regarding the bank failures failure.
“It was a question regarding the insured amount of $250,000,” said Wilson, who noted his CU has 53,000-plus members. “If a member does ask, we have a standard response that their deposits are insured by the NCUA and nobody has ever lost a dime of NCUA-insured deposits up to the $250,000. If someone wants a higher level of response, or has very specific questions a front-line employee cannot answer, they can speak with a manager, a VP-level person, or with me directly.”
Wilson said that currently he does not believe there is a great need to “get out in front” of any potential member unrest.
‘A Lot of Trust’
“There is a lot of trust in us as a local credit union,” he said. “We live in the communities where our members reside and they either know someone at the credit union or have contact with their family, friends and neighbors who knows someone who works at the credit union. That makes it real for them, unlike some unknown entity in another state.”
Wilson stressed that credit unions just need to “continue to do what we do well.”
“Keep lending and offering the quality products and services we always have as credit unions and what SeaComm has done for 60 years,” said Wilson. “Consistency will go a long way to continue to instill confidence in the credit union.”
‘Not Being Felt’
In Dallas, Becky Reed, CEO of $164-million Lone Star Credit union—which offers cryptocurrency services—wants to make sure her team is fully familiar on the SVB and Signature Bank failures, and how the troubles the banks suffered are not being felt within the CU movement.
In the case of Signature Bank, it had significant dealings and business with cryptocurrency firms.
“I sent an internal communication to our staff and our board, however, reassuring them that the causes of those bank failures—high concentration in venture capital, tech or crypto depositors—are not impactful for us. We are a community focused consumer financial cooperative and not subject to the kinds of investor pressure those big banks have for high returns.”
Reed said she does not plan to address the failures with members unless they begin to ask about what happened and if the CU could in some way be affected.
“So far, we have not had members call or come in with concerns. I don’t plan to address it publicly unless there’s a big outcry which, so far, has not been seen in the world outside of Silicon Valley,” Reed said.
Any Benefit to Credit Unions?
Could credit unions benefit from the bank failures?
“During the last financial crisis in 2008-2009, when big banks failed, there was a depositor flight to safety where credit unions saw an influx of new members,” reminded Reed. “I suspect that may happen again as credit unions are generally seen as a safer alternative. If there were to be an industry focus on safety and soundness, I think that would play well in this skittish market.”
Luke Labbe, CEO of $312-million PeoplesChoice CU in Saco, Maine, agreed.
“We have had one call, from a senior member,” Labbe said. “This is a great time to show the credit union difference as many customers of commercial banks with uninsured shares are likely to move their funds. It is times like this that give credit unions a great opportunity to steal market share.
A Note to the Board
At the $2.6-billion All In FCU in Daleville, Ala., CEO Bobby Michael said he has simply sent a note to his board.
“I sent something to them explaining that our business model is very different than SVB’s, and also explained to how well-capitalized we are,” said Michael, whose organization’s net worth stands at 10.53%, according to Call Report data.
In Washington, Thomas Dominique, CEO of the $120-million Labor Credit Union, also indicated all is quiet, with no members having shared concerns so far.
“It's something we will keep an eye on. But for now, I don't see anything we need to do to address it,” Domingue said.
‘Not Following the News’
Robby Glore, CEO at $13.6-million Combined Employees CU in Warner Robbins, Ga., said he is not surprised his membership is showing no concerns over the bank failures.
“I haven’t heard anything from our members regarding this,” he said. “Most of my members are minimum wage people and probably do not follow this news as closely as others do.”