"Welcome to the Brewery Credit Union, the best place to save and borrow,” says a friendly, recorded voice at the other end of the line.
At a time when banks and other lenders look more like wards of the state than the venerated institutions they once were, it’s difficult to imagine that anyone is still happy to lend money, or even talk about it. But stodgy, dependable, nonprofit credit unions are still chugging along, approving loans to members at reasonable rates.
“Credit unions are probably the safest depository institutions in the country right now,” says Brett Thompson, president and CEO of the Wisconsin Credit Union League. “During some of our nation’s worst economic times, credit unions have been used as a source of continued lending to help rebuild the economy.”
What makes credit unions tick?
“We tend to lend responsibly. We’re not putting people in loans just to make a buck and passing them on and never thinking about them again,” says Jennifer Schilling, president of Empower Credit Union.
Empower is a closed charter credit union, meaning it is associated with a company. It serves 5,800 We Energies employees, with assets of $130 million. Deposits are federally insured to $250,000.
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Mortgages make up a hefty chunk of Empower’s business, with some 900 on the books, but foreclosures are rarely a problem. “I’ve been here 11 years, and in that time I’ve seen maybe five property foreclosures,” Schilling says. Empower offers straight mortgages and ARMs (adjustable rate mortgages), but not the subprime loans that are at the root of the mortgage crisis.
“It’s good to be on the right side of the ledger,” says Dean Wilson, president of the 8,200-member Focus Credit Union. “I like to refer to the business as America’s best-kept secret.”
Wilson lists several advantages that credit unions hold over banks. “First, when our credit union sells a loan, it resides on our balance sheet,” Wilson says. “We don’t sell loans, securitize them or head to Wall Street with them. We hold our own mortgages.”
Then there’s the nonprofit nature of the business--credit unions can offer lower rates on loans, and they are not as competitive with each other, so they are more likely to cooperate and share information. “Because we aren’t profit-driven, we can better focus on serving members’ needscars, houses, credit cards, checking accounts and so on,” Wilson says. But being a nonprofit is a double-edged sword. “We don’t have much of a marketing budget, so it’s hard to get the word out about what a great deal a credit union offers,” he adds.
Mikal Gilliat, marketing director for Brewery Credit Union (BCU), says that being a nonprofit means that customers aren’t sold unnecessary and costly loans. “This loan mess came about because loan officers at banks and mortgage brokerages are on a commission basis,” he says. “The bulk of their income is from sales commissions, so they end up selling loans that people don’t need.”
At a time when most banks are limiting housing loans, BCU is ramping up, with about 150 mortgages on the books. “We only got into mortgages a few years ago. A lot of our business is with FHA [Federal Housing Administration],” Gilliat says.
Gilliat and the 7,500 BCU members have the last laugh Bankrate.com gives their institution a fourstar “Safe & Sound” rating (out of five stars). The big bank down the block from BCU has one star.
