Slideshow Examining deposit strategies in a changing rate environment

Published
  • May 25 2018, 1:15pm EDT
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Credit unions share their deposit pricing strategies

As the Federal Reserve Board has increased short-term interest rates over the past three years, many banks and some credit unions lagged in boosting the rates they pay on savings accounts, money market accounts and certificates of deposit. Today, however, the competition for deposits is not just that bank down the street, it comes from online vendors. With more rate hikes are scheduled during the remainder of 2018, how will credit unions respond? Credit Union Journal asked attendees of the recent CUNA CFO Council conference to share their pricing strategy and to discuss who they see as their deposit competitors.

Brian Clarke, CFO, $7.8 billion Bethpage FCU, Bethpage, N.Y.

We did not want to get into battles on CD specials, so we raised our money market rate to 1.25 percent in December, and then 1.50 percent in March. In money market we have $2 billion in deposits. By doing it this way, all the members benefitted, not just the ones paying attention to CD specials. There was a cost, of course, but we had really strong first quarter deposit growth. The hope is to improve loyalty.

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Brandy Bogue, AVP of finance and accounting, People’s Trust FCU, Houston

We use Rate Watch to compare to other financial institutions in our asset size. We also follow the information on Brick and Associates. We try to be in the middle or close to the top for our area.

Ryan Balts, VP of finance, $2.3 billion Royal CU, Eau Claire, Wis.

The deposit competition is really strong in our area. We are a leader in the Chippewa Valley, and we want to maintain our status. We are seeing pressure on both money market rates and CD rates. We are offering a 2 percent CD for two years.

Rick Austin, CFO, $240 million Fort Community CU, Fort Atkinson, Wis.

Our deposit competition is not necessarily our local market, it is online banks. We are not trying to meet the online rates. We try to be just close enough to keep member funds. We know a certain segment will chase rates. We try to lag as much as we can without losing deposits. We can’t reprice the whole loan portfolio, so we do what we can to keep the spread.

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Bianca Moore, controller, $230 million West Community CU, O’Fallon, Mo.

We are trying to attract new members. We have promoted our CD rates to attract new people and to become the PFI of current members. We market heavily within a three-mile radius of our brick-and-mortar locations. Our competition is the stock market. The St. Louis market is heavily banked, so there is always competition for deposits, but right now the stock market is doing really well so a lot of people have their money there.

Stephanie Straker, CFO, $550 million Envision CU, Tallahassee, Fla.

We have a couple different metrics we look at. We look at what the local CD market and brokered CDs offer for their promotional rates. For regular rates, historically for a 100-basis point move by the Fed we move 40 basis points. We want to be competitive. We look at Rate Watch. It tells us what other financial institutions are doing in each one of our markets so we can adjust. It is very hard to compete with the online institutions because they don’t have any overhead, and we have a couple good players in our market, but for promotional rates we are the best. Capital City Bank, a local community bank, is a solid competitor.

Amber Quinteros, controller, $1 billion IQ CU, Vancouver, Wash.

We have implemented what we call intelligent checking. This account gives higher rates if members also use certain products. Consumers shop around, so I would say everyone is our competition.