Bank Watch

Credit unions ‘on fire,’ UNC Charlotte’s Plath says

UNC Charlotte professor Tony Plath says the growth at credit unions comes as consumers perceive them as a lower-cost alternative to bigger banks, which still have work to do to restore their post-recession reputations among consumers.
UNC Charlotte professor Tony Plath says the growth at credit unions comes as consumers perceive them as a lower-cost alternative to bigger banks, which still have work to do to restore their post-recession reputations among consumers. jsimmons@charlotteobserver.com

Truliant Federal Credit Union’s announcement last week that it plans to open additional branches in the Charlotte area underscores the rapid growth the U.S. credit union industry has been experiencing since the financial crisis, a UNC Charlotte professor says.

Tony Plath, who teaches finance at UNCC, told me the credit union industry is “on fire with growth,” thanks in part to consumer discontent with the banking industry – and, especially, big banks.

Last week, 63-year-old Truliant announced plans to open six branches in the Charlotte area over the course of this year and next. Those will join eight Truliant branches already operating in the area. Truliant is based in Winston-Salem.

Plath said Truliant’s expansion comes as credit unions have seen a fast rise in deposits and new customers every year since 2008.

“The demand's already present in the market,” Plath says. “Truliant's just trying to figure out how to service it.”

Credit unions aren’t challenge-free. The credit union industry has lobbied Congress in recent years for it to remove a federal restriction on the amount of small-business loans a single credit union can make, Plath said. Credit unions have pushed unsuccessfully for the cap to be raised from 12.25 percent of a credit union’s total assets to 25 percent.

Given the growing demand for credit union products and services, among other factors, “it's really only a matter of time” before credit unions persuade Congress to raise the cap, he said.

Truliant’s expansion also comes at a time when some big banks, like Bank of America, have been shedding large numbers of branches, which are expensive to operate. Those closures follow declines in foot traffic into branches as consumer transactions on mobile phones continues to rise.

In an era of branch cuts, Truliant’s plans for Charlotte might seem extravagant, Plath said. But they’re not, he said.

“Why? Easy answer: Truliant's retail footprint in the Greater Charlotte regional marketplace is really quite small, especially in comparison to the big banks from whom they're taking away large numbers of both customers and new deposits.”

The growth at credit unions also comes as consumers perceive them as a lower-cost alternative to bigger banks, which still have work to do to restore their post-recession reputations among consumers, Plath said.

“And until they figure out how to accomplish this job, the credit union industry is making proverbial hay while the sun shines.”

Roberts: 704-358-5248;

Twitter: @DeonERoberts

  Comments