Deposits continue to rise at valley credit unions, although more slowly than at the start of the pandemic | News
Deposits have skyrocketed at Central Valley credit unions during the pandemic, and they are still on the rise – a sign of economic strength that could bode well locally for the holiday season and beyond.
The California Credit Union League said savings and other funds held in accounts at three dozen valley financial institutions reached a record high of $ 14.1 billion in September. This represents an unprecedented 45% increase over two years.
One of the results has been an increase in new loans as credit unions strive to turn the influx of cash into investments that can generate future profits. The league said that since the start of this year, its Central Valley members have experienced quarter-by-quarter overall growth – including significant increases in the third quarter – in all loan categories except mortgages. first row.
The numbers indicate strength at many levels, including the financial situation of workers and their employers.
“As workers entered the crisis point of COVID-19 and came out on the other side, their increased deposits have provided a financial cushion as local economies and businesses face a high churn rate,” dislocation, repair and renewal of hiring needs with the labor market, as well as employees. decisions made in the midst of the so-called ‘big resignation’, “the credit union group said in a press release, referring to the end of this statement to workers who quit their jobs or stayed out of the working population.
Valley Strong Credit Union is among those with record deposits, although Executive Vice President and COO Steve Matejka noted that the rate of new deposits at the Bakersfield-based institution has slowed significantly in the past. third trimester. A representative of the professional group mentioned the same trend but did not provide any data to measure it.
There hasn’t been a recent drop in deposits at Valley Strong, which Matejka says would normally be expected around the holiday season. He added that the credit union is increasing its loans to offset higher deposits, and said the local economy looks strong even though its members remain cautious about high levels of inflation.
As for the cause of the increase in deposits, Matejka attributed it to the fact that the government stimulus funds were not spent “because our members have been very conservative and are preparing if the economy were to get worse” .
There may be several factors behind the higher deposits, Cal State Bakersfield economist Richard Gearhart explained in an email.
People who don’t traditionally use accounts should have opened one to receive stimulus money, and Gearhart said that in itself could have increased deposits overall.
Or, some of the money deposited in valley credit union accounts may be student loan money, he wrote, highlighting national figures showing credit card debt is typically declining, but student loan money held by consumers is actually increasing.
Gearhart also said mortgage debt has increased across the country and some borrowers may have invested more money than they really need to buy a home.
He also noted that consumers have been able to save more money than usual due to the postponement of student loan, mortgage and rent payments, not to mention the reduction in child care costs, because of more and more parents have prevented their children from going to school due to the pandemic.
Another possibility that Gearhart mentioned is that people have saved up for vacations or family trips when the economy fully reopens.
“I think once we reopen,” he wrote, “a lot of these (account) balances are going to be taken as the repayments and child care restart.”