Friday, May 3, 2019

CUs Offsetting Higher Operating Expenses with Higher Service Charges on Deposits

A study found that credit unions are offsetting higher operating expenses with higher service charges on deposits. But it questions how long this can continue.

According to Moebs Services, non-interest expense-to-asset ratio at credit unions was an average 3.07 percent, almost 20 percent higher than the average at banks.


However, service charges on deposits at credit unions are more than double the service charges on deposits at banks, 61 basis points versus 24 basis points.


But Michael Moebs, Economist & CEO of Moebs Services, noted that "offsetting costly operational expenses with high service charges cannot go on forever.”
Posted by at
Labels: ,

2 comments:

  1. Grandmaster BMay 3, 2019 at 11:11 AM

    I guess Credit Unions will need to grow to the size of banks? We all know about efficiencies of scale; Credit Unions are smaller so they should have a higher OpEx to Asset ratio - correct?

    ReplyDelete
    Replies
    1. Keith LeggettMay 3, 2019 at 6:24 PM

      You are right about size and economies of scale. However, I don't know if Moebs Services use industry data or his client data.

      Delete

Subscribe to: Post Comments (Atom)
 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.