The Filene Research Institute announced two new studies focused on 1) trends in credit union merger activity, and 2) rates offered by credit unions compared to Subchapter S bank corporations. In "Characteristics of Credit Union Mergers: 1984-2008," research found that 12,485 credit union mergers took place during 1971–2008, accounting for most of the reduction in credit unions from the peak of 23,866 in 1969 to 8,147 in 2008. These mergers transferred members and assets from institutions that performed less well to institutions that, on average, performed far better. The overwhelming majority of merged credit unions were very small, but few of them merged into what are considered "large" credit unions today. The study examines the influence of dramatic external events such as the savings and loan crisis, changes in the regulatory landscape, and the severe 1980 recession on the pace of credit union mergers.
The second study, "A Comparison of Bank and Credit Union Pricing: Implications for Tax Benefits of Subchapter S Incorporation," compares loan rates offered by credit unions, C corporation banks, and Subchapter-S banks. Subchapter S banks have incur no federal taxes on corporate-level earnings. They began in 1996 and account for about one-third of all banks incorporated today. Although not taxed at the corporate level, the study shows that Sub-S banks set rates similar to their C corporation counterparts. While higher deposit rates benefit Sub-S customers over C corporation customers, this pricing tactic is offset by loan rates that tend to be higher than both C corporation banks and credit unions. Credit union members benefit on both the deposit and loan side for almost every product category, compared to both C corporation and Sub-S banks. Overall, Sub-S banks pass on few, if any, of their tax benefits to customers in the form of better rates.
Filene Research Institute is a non-profit consumer finance think tank. Download a free sample report.
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