Sunday, March 14, 2010

Oregon's Point West CU Slashes Rates to Zero to Drive Away Deposits

There is an interesting article in the Oregonian about Point West Credit Union seeking to drive away depositors to improve its net worth ratio.

The credit union at the end of 2009 was significantly undercapitalized. However, the credit union was not able to generate income fast enough to offset its expenses and to improve its net worth ratio. As a result, it resorted to shrinking its balance sheet.
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2 comments:

  1. AnonymousMarch 15, 2010 at 1:33 PM

    Then again, if there are no earnings to share with the member-owners, then dividends cannot be paid. That is one difference that is overlooked when comparing banks and credit unions. And stressed by the banking industry about why credit unions should not provide the financial services that consumers expect today from their financial institutions.

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  2. AnonymousMarch 15, 2010 at 4:44 PM

    You may find yourself in good company with Deborah Matz on this one. She used a similar situation in a letter to Barney Frank, explaining that circumstances such as these are why credit unions need sources of alternative, or secondary, capital. Point West's situation is not unique, for credit unions in particular and financial institutions in general.

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