Deposit growth slowed across the credit union industry throughout 2022, although some states still experienced healthy gains — and the recent banking crisis may already be bringing more deposits to credit unions.
Brian Lee, president and CEO of Landings Credit Union in Tempe, Arizona, said he has received several calls over the past few weeks, especially from small-business owners seeking answers and stability. In addition to members asking about insured shares and the safety of the credit union, Landings has had interest from others wanting to move money to the credit union to make sure they are covered.
Although it is too early to say how long the inflow will last, Lee says the bank failures have been an eye-opening experience for many people.
"So far I know of a few personal and business accounts that we have opened as a safe place," Lee said. "Some small businesses I talked to have now opened accounts at several banks and credit unions instead of just the one relationship they had before."
This would reverse a trend of slower deposit growth from the end of 2022. Industrywide, total shares and deposits rose by $61.3 billion, or 3.4%, year-over-year to $1.85 trillion in the fourth quarter of 2022, according to the
By comparison, deposits rose 11.4% to $1.63 trillion in 2021.
In 2022, deposits declined year-over-year in eight states, led by New Jersey with a 2.6% drop and Louisiana, which was down 1.2%. Other states, including Arizona, fared much better. Arizona credit unions experienced 3.5% year-over-year growth in the fourth quarter, according to the NCUA.
Despite high inflation, Arizona has experienced growth in wages and better-paying jobs, which is leading to higher deposits, Lee said. The average share per member for the $253 million-asset Landings is about $3,400 higher today compared to pre-pandemic levels, Lee said.
At Landings, total shares and deposits increased by 4.5% year-over-year in the fourth quarter to $232 million, Lee said. "Although deposit growth has slowed down for Landings and other Arizona credit unions since the highs of the last few years, we have still experienced steady growth."
In neighboring New Mexico, credit unions experienced 4% year-over-year growth in the fourth quarter — the third highest rate of any state.
The $4.1 billion-asset Nusenda Credit Union in Albuquerque, the largest credit union in New Mexico, saw total shares and deposits increase by 5% year-over-year in the fourth quarter, to $3.5 billion.
Michael Buehler, Nusenda's executive vice president of finance and lending, said the credit union had strong deposit growth throughout the pandemic and has seen it come into line with industry averages more recently.
One positive factor at play is that Albuquerque typically does not have the large economic swings seen in larger metro areas, and so is a more stable lending environment, he said.
Loyalty will also be a factor in fueling deposit growth, Buehler said.
"Because throughout the pandemic we went to great lengths to accommodate members and serve their needs, which drove more membership to Nusenda," he said.
Another state that experienced solid deposit growth across 2022 was Maine. Credit unions in the state saw 3.2% year-over-year growth in the fourth quarter.
One of those, the $496 million-asset Evergreen Credit Union in Portland, reported that deposits increased by 6% year-over-year in the fourth quarter to $460 million, according to call report data from the NCUA.
Jason Lindstrom, Evergreen's president and CEO, said higher deposit rates are the largest factor driving the growth.
"We have seen it continue into early 2023, but our deposit rates are higher than they have been for years," Lindstrom said. "At some point, I would think this would slow some as the population has moved most of their money."
Lindstrom added that with only 1.3 million people living in Maine, there will be a point when most who have the funds have moved them to accounts that pay a
Many credit unions and community banks
Lindstrom said that Evergreen's recent deposit growth could be tied in part to income tax returns, so it is hard to quantify how much of the new funds are due to the SVB/Signature news.
"We have had a few conversations with members who have had concerns about bank failures and most of the members we talked to understand what happened," Lindstrom said.
