The Cooperative Liquidity Advantage of Member Ownership

The primary focus of credit union strategy is the member-owner. While business lending is growing, it is only a small percentage of loans. For almost all credit unions, member shares are the primary source of funding, not borrowings or large organizational deposits. The same is not true, on average, for banks.

Following is a comparison of insured deposits (balances less than $250,000) as a % of total deposits for banks and credit unions for the past five years:

Year-end:              Credit Unions % Insured Savings         Bank % Insured Deposits

2018:                                     93.0%                                                    59.6%

2017:                                     93.2%                                                    59.0%

2016:                                     93.6%                                                    59.2%

2015:                                     94.1%                                                    59.5%

2014:                                     94.5%                                                    61.0%

The $79.9 billion in savings in excess of the $250,000 NCUSIF insurance coverage are dispersed among 3,628 credit unions.

Over 40% of banks’ total funding is in uninsured deposits totaling $4.99 trillion at December 2018 year end. The peak year for insured deposits for banks was in 1991 at 82.1%.

In evaluating liquidity risk, the most common assumption is that consumer deposits, are the most dependable source of funding in a crisis.

The cooperative member-owner design further enhances this financial strategy. It is the member relationship, sometimes developed over generations, that is the intangible capital providing credit unions stability and relevance, especially when financial markets are disrupted. The value is real, even when unrecorded or perhaps unrecognized.

As a member, I trust the credit union values my participation as more than a consumer of products.

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