Amidst The Gloom, CUs Hit A New Milestone: 10% Marketshare

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WASHINGTON-For the first time in history, credit unions in the U.S. have reached the 10% mark in terms of share of retail consumer deposits.

It's a significant milestone CUs will likely surpass in the coming years, suggested Callahan & Associates. "With the strong share growth we are seeing currently and how credit unions are remaining active with competitive rates, I think we will continue to see credit unions make strides here," said Nick Connors, senior industry analyst. "They are positioned well."

Credit unions hit the 10% mark in March after closing 2009 at 9.8%. It has been a steady climb for the industry over the past year, gaining ground each month after a marked drop in 2008 to 9.2%. CUs held onto 9.6% of the deposit market from 2003 to 2005, before dipping to 9.4% in 2006 and 9.3% in 2007.

What has moved credit unions above 10%, Connors said, are all of the factors that have led to other CU gains during the recession-the flight to safety, banks pulling out of markets, and positive media coverage on a national scale. "From our perspective this is just the continuation of many of the trends we have been seeing with credit unions during the last two years."

Press coverage may have played a larger role than many people believe, he added. "The awareness of credit unions by mainstream consumers is much greater than in the past. So many more people now have a better understanding of what a credit union is and does." Similarly, Connors reminded that credit unions received a significant amount of positive news coverage for not being involved in many of the questionable credit card practices employed by the big banks.

The 10% market share is an aberration, insisted Connors, who believes CUs will retain the new business. "It's easier to retain deposit market share than loan market share, which tends to be more volatile." If money eventually heads back to the stock market, Connors pointed out that it will affect all financials equally, and won't impact credit union share.

The accomplishment bodes well for other areas, especially lending. More CUs are getting into member business lending, and the overall demand for loans should pick up in the near future, Connors stated.

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