San Francisco North Bay credit unions break record with Q4 checking deposits

North Bay credit unions continued on a banner growth path for the last quarter of 2021, breaking records left and right, including a 99% increase in checking account balances compared to the same period in 2020.

According to a snapshot view from the California and Nevada Credit Union Leagues, a collective $2.7 billion was dumped into these checking accounts from October to December at eight financial institutions based in Marin, Napa, Solano and Sonoma counties. Meanwhile, savings accounts dipped, showing a shift in where members placed their money. Customers deposited $3.6 billion in savings accounts in the quarter, which is down 10%.

In total, savings and checking deposits equaled $11.7 billion for the last quarter, a record that dwarfs the $5.8 billion recorded five years ago in the same period. The Ontario-based trade organization surveyed results from Befit, Community First, Marin County, North Bay, Redwood, Silverado, Sonoma and Travis credit unions.

Like others, Redwood Credit Union Chief Financial Officer Ron Felder concluded that people are either spending more during this phase of the two-year pandemic or plan to.

“Savings rates have definitely come down to pre-pandemic, normal levels,” he said.

Savings deposits have dipped and are balanced by an overall surge in checking account deposits, leading to year-over-year growth of 20%.

Redwood Credit Union among them, membership for North Bay credit unions edged up by 4% to 617,000 members. Those 26,300 new members broke another record, the Leagues reported.

Loans for the eight credit unions surveyed increased by 5% to $8.7 billion.

Felder indicated that with the looming prospect of interest rates going up this year, much activity occurred involving members buying homes and vehicles and “trying to lock in low rates” at the same time.

“Rates will go up starting in March. This will put downward pressure on first mortgages. But we’ll still see growth,” he said, singling out credit card use going up. “Looks like we’re over the hump with (the) Omicron (variant).”

Credit card lending among the eight credit unions nudged up by 2% to $413 million for the past quarter ending 2021.

Business loans have been on a steady rise in the fourth quarter, with Redwood Credit Union processing 11% more, a figure that coincides with the other seven financial institutions’ 9% increase to $614 million. This includes income property real estate sales.

Felder attributes this upward movement to entrepreneurs reinventing themselves with creative opportunities in a pandemic-spawned “changing landscape” in the world of commerce.

Most executives at banks and credit unions acknowledge they’re coming off a whirlwind year of financial benefits for a good portion of the clientele and their own institutions. They’ve seen substantial growth for over a year, while the pandemic raged.

At Community First Credit Union, 2021’s double-digit gains marked a year of growth in assets, deposits and lending, the latter taking in a record $356.2 million in loans.

CEO Scott Johnson noted fewer “charge-offs,” meaning bad debt, materialized last year.

“That’s the big thing that stands out. People didn’t default on their loans,” he said. Still, most banks and credit unions put away money in loan loss provisions for devastation that didn’t happen.

“The system was flush with money,” he said, mentioning how his credit union saw a surge in members socking their money away.

Just at this Santa Rosa credit union, deposits reached exceeding $100 million more to $687.3 million for 2021, $100 million more (17%) than at the end of 2020.

“It was the best of times financially, and yet, it was the worst of times because COVID(-19) made everything so difficult,” Johnson said.

Will the trends continue?

“We did see deposits slow in the second part of the year,” Johnson said.

To that, Sonoma State University Economics Professor Robert Eyler predicts in one aspect, deposit trends, will dip slightly in the next few years as the economy returns to a rate of normalcy and North Bay citizens drift back to work.

“When it comes to worker household deposits and savings, these volatilities should eventually diminish if the labor market’s continued job growth starts to increasingly resemble pre-pandemic hiring patterns,” he said.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach her at 530-545-8662 or susan.wood@busjrnl.com.