Many credit union CEOs keep an eye on bank earnings each quarter, but some say they will pay special attention this time around to gauge the economic and competitive fallout from the failures of Silicon Valley Bank and Signature Bank.
U.S. banks
Harvard University Employees Credit Union's President and CEO
There are stark differences in the business models of those big banks and his $1.1 billion-asset credit union in Cambridge, Massachusetts, but Leonard said there are also some similarities worth noting, such as consumer deposit flows, consumer lending, the cost of funds and changes in asset quality.
"Additionally, there is value in learning about their new initiatives, particularly around technology," he said.
Leonard noted the significant amount of press around the collapse of Silicon Valley and Signature banks and said it will be interesting to see what regulatory changes may occur as a result.
"The last thing we want is for consumers to be nervous about the stability of the banking industry, so I felt the [regulators] stepping in to guarantee deposits was the right move," he said.
Publicly traded companies such as banks are required by the Securities and Exchange Commission to file earnings reports at the end of each quarter detailing the company's performance. But not-for-profit organizations, including credit unions, are under no such obligation.
They are required to file call reports with their state and federal regulators, but credit unions aren't owned by shareholders and don't host public calls each quarter.
But that doesn't mean they don't listen in on bank earnings calls.
SeaComm Federal Credit Union President and CEO Scott Wilson said he listens in on occasion, usually to the calls of the regional banks that the $815 million-asset credit union competes with.
He said the Massena, New York-based institution, which has branches across northern New York and Vermont, monitors bank earnings each quarter and pays particular attention to balance sheet reorganization news, especially with bond values being affected by rising rates recently.
Wilson said he's also watching the growing transfer of available-for-sale debt securities to the held-to-maturity category by some companies.
He said the situation with Silicon Valley Bank has made all credit unions aware that certain news events lead consumers to wonder how safe their deposits are.
"But SVB and Signature's balance sheets were vastly different than most [financial institutions]," Wilson said. "The regional banks and credit unions we compete with are not in the same realm."
Silicon Valley Bank's outsize deposit
Some credit unions say they pay just as much attention to the banking industry as they do their own peers.
John Holt, president and CEO of $553 million-asset Nutmeg State Financial Credit Union in Rocky Hill, Connecticut, said he is always curious about any trends the banks are seeing that could make an impact on his company.
He said he primarily looks at delinquencies, charge-offs, liquidity, net income and return on assets – especially among banks that have operations in Connecticut.
"I also like to see deposit and loan trends," he said. "Obviously with the news on Silicon Valley and Signature banks, we are paying closer attention to liquidity and deposit trends."
Holt said he's specifically looking for anything unusual that points to a trending concern, and of course, the banks' commentaries about operations.
"I can appreciate the view of economic activity and the impacts that has on banking operations," he said.·
But others have only a passing interest.
John Buckley Jr., president and CEO of the $225 million-asset Gerber Federal Credit Union in Fremont, Michigan, said he doesn't track bank earnings specifically.
"I only consider the impact on the overall economy rather than certain banks as being bellwethers," Buckley said. "How the major banks make their money is so far removed from what we do at the credit union that I don't find it particularly germane."
