Banks, credit unions defend roles in marketplace

The rivalry between banks and credit unions may not be quite as intense as the historic and often heated range wars pitting cattle ranchers versus sheep herders on the high plains. But that’s not to say the sparks don’t occasionally fly.

Both sides got a taste of the spat in January when Colorado state regulators overwhelmingly decided not to approve a measure that would have helped Boulder-based Elevations Credit Union in its quest to purchase the assets of Greeley-based Cache Bank & Trust to form a combined organization with $2.2 billion in assets and 141,700 members.

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See related story Colorado Banking Board denies Elevations Credit Union’s bid to buy Cache Bank assets.

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Other issues involving the proposed sale also will face regulators; this one related to whether Cache could act in the same way a national bank would in terms of being absorbed by a state credit union, an action that finds no clear guidance in Colorado code. Robert Vinton, an attorney with Fairfield and Woods PC, who represented Cache in the hearing, argued that different treatment for state and national institutions “puts a state bank at a real disadvantage.”

But credit unions’ growing visibility in the financial-services sector has put many bankers on the defensive. Many think it’s unfair that as nonprofit organizations, credit unions don’t pay taxes, which allows them to offer lower loan rates than banks.

“The average Coloradan pays $5,800 in income taxes annually while every Colorado credit union — even $2 billion institutions like Elevations — pays $0,” Colorado Bankers Association CEO Don Childears said in a statement released after the vote, adding that “every dollar is needed” in an era of tight state revenues.

Credit union officials say the charges of unfairness are overblown.

Representatives of Elevations Credit Union declined to comment for this article. But Jennifer Sussman, chief marketer for Ent Federal Credit Union, a Colorado Springs-based nonprofit that is aggressively targeting Northern Colorado for expansion, pointed out that banks still remain far more visible and have about four depositors for every one credit union account holder in the four-county northern Front Range corridor.

Credit unions indeed can offer lower rates and fees because “we don’t have stakeholders we have to pay outside of our members,” Sussman said, “and we do give back to members in terms of ‘extras’ such as greater interest on checking and savings accounts.”

However, she said, “banks tend to have more of a ubiquitous presence. They’re a lot more visible.”

According to the latest figures, posted last Sept. 30 by the Callahan branch analyzer, 14 credit-union institutions and 43 banks operated in Colorado, and banks accounted for 81.62 percent of the business, compared with 18.38 percent for credit unions.

Not that credit unions haven’t tried to make the playing field a bit more even. Ent has launched a full-scale expansion drive in Northern Colorado. It already has branches in Firestone and Brighton,  is looking for a spot in Greeley, and is building two branches in Fort Collins and one each in Windsor and Loveland.

But perception remains an issue, Sussman said. Shared branching, in which a customer with an account at one credit union can make deposits or withdrawals by walking into other credit unions under different names but which are part of a network, “is a benefit that may not be as well known,” she said.

“People also don’t realize we’re also federally insured,” Sussman said.

Credit unions originally were intended to serve specific clienteles such as teachers, students, members of the military or other public employees. Changes in how the institutions can be chartered have allowed them to alter those restrictions to include location instead of vocation, but Sussman said much of the public still doesn’t realize “you don’t have to have a special affiliation to join.”

And while national banks such as Chase, Wells Fargo and US Bank have national advertising and brand identity, she said, “a few credit unions like Navy Federal are allowed to operate nationwide, but there are a lot fewer of those.

“Anybody in this space” — whether it’s a credit union or a smaller, locally owned bank — finds it tougher to compete for awareness “and for comfort people have in knowing you’re big enough that your money’s safe,” Sussman said. “There’s always that anxiety that can be there.”

One such institution is Wiggins-based High Plains Bank, which has branches in Longmont, Wiggins, Bennett and Flagler and only $205 million in assets.

“All of our loans are within a 65-mile radius, said John Creighton, the bank’s president and chief executive.

Whereas credit unions market heavily to consumers, about 85 percent of High Plains’ lending goes to commercial interests, Creighton said. Yet because of its size, his bank does tout the same type of advantages credit unions do: a more personal relationship with account holders and flexibility to offer atypical helping hands such as three-month deferrals of loan payments because of the general shutdown of business and society triggered by the coronavirus pandemic.

“On March 7, I was at Longmont High School, sitting shoulder to shoulder with people,” Creighton said, “and three days later I was coming up with ways to help our customers with their cash flow … and now we’re social distancing.

“Actually, we rarely think about credit unions or the large banks either,” he said. “We’re in a different niche. We don’t do the kind of consumer lending some banks do. We’re really just trying to focus on our customers, our communities. We know our customers almost by name throughout our loan portfolio. That’s the virtue of being small.

“We really rely on providing an intimate level of services,” he said. “We certainly lose customers to big banks and credit unions at some time, but it doesn’t change our business practices.”

Creighton said High Plains competes less with credit unions than with the Farm Credit Administration, which also doesn’t have the same tax burden banks do. And he does wish there were a more even playing field for competition.

“But I don’t lose sleep over it,” he said. “There’s definite advantages of being privately held.”

“At the end of the day there are different needs that everybody can serve better,” Ent’s Sussman said. “There’s a reason we both exist and we’re both contributing to society today.