North Bay credit unions saw record growth in deposits in first quarter, as loans increased 13%: report

Snapshot of nine credit unions in Sonoma, Solano, Napa and Marin counties shows double-digit increases in key metrics such as savings account deposits and lending activity through the end of March .

According to the California and Nevada Credit Union Leagues, the Ontario association representing financial institutions, $ 4.5 billion has been deposited into the savings accounts of members of nine credit unions in the greater North area. Bay. This is a record saving of 119% compared to the same period last year.

Deposits in chequing accounts were down 62% from the previous year.

Jay Prag, a clinical professor of economics and finance at the Drucker School of Management in Claremont near Los Angeles, told the Business Journal that members of credit unions are likely transferring money deposited into their checking accounts and the were saving instead of spending those dollars.

“There is a ton of money in the system waiting to be spent,” Prag said.

Much of that money has come in the form of government relief programs designed to keep people afloat during economic restrictions due to the pandemic. With that kind of government spending, that money could lead to other results that economists are watching. Prag warned that the inflation rate could climb to 6% by next year if left unchecked.

“The (Federal Reserve) is exploding, but it’s going to get worse, and we’ll start to see those cash balances disappear because the prices go up,” Prag said.

The other persistent trend that economists and financial executives are seeing is lending activity. The credit union processed $ 8.4 billion in loans, marking an annual increase of 13% from 2020.

Senior mortgages led the way with a record $ 4.3 billion in loans channeled through these credit unions, an increase of 29% from last year. All loans totaled $ 8.4 billion, an increase of 13%.

Low interest rates contributed to this result. As long as rates remain low, potential homeowners and existing residents in refinancing will see the need to take advantage of the loan bonus, Prag said.

While this is good news for borrowers, low interest rates can be a bane and a blessing.

“It’s a delicate situation for a membership organization. Members might be happy at first but sad later, ”said Prag, explaining how low rates are good for loans but bad for savings rates. Members looking for higher returns may find the savings rate more difficult.

“They will have half of their members disgruntled, trying to find a rate of return (on the accounts),” he said.

The figures show that clients have chosen to improve their returns by placing their funds in money market accounts, which saw a 242% increase to a record $ 3.4 billion among credit unions in the region. The craze for these types of accounts offset an 18% drop of $ 1.1 billion in certificates of deposits.

A house success story

“You can generate more cash with money market accounts,” Redwood Credit Union CFO Ron Felder told the Business Journal.

Felder said his Santa Rosa-based credit union had shown no signs of slowing down with its progressive trends stemming from the pandemic.

For the six-month period ending June 30, this Sonoma County financial institution saw savings account growth of over $ 6 billion, up 24% from 2020.

“What we’ve seen members do is take their money and save it,” he said, listing the government’s stimulus packages, unemployment benefits and loan deferrals as as contributors.

With this, membership growth increased by 7%, which is more than 4% of the average of the nine credit unions. In total, a record 26,000 new members were added to their rosters.

Susan Wood covers law, cannabis, manufacturing, biotechnology, energy, transportation, agriculture, and banking and finance. For 25 years, Susan worked for various publications, including the North County Times, now part of the Union Tribune in San Diego County, as well as the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Contact her at 530-545-8662 or susan.wood@busjrnl.com