Michigan Credit Union League Comments on DFCU Financial's Plans to Convert to a Mutual Savings Bank

The Michigan Credit Union League (MCUL) is disappointed to learn of DFCU Financial’s intention to seek to convert to a mutual savings bank. However, we respect their decision and are hopeful that the process will be carried out with a high level of integrity and fairness so that members’ interests are safeguarded.

A decision of this importance should be an informed one, and federal law requires the conversion process be as open, democratic and informative as possible. At the very least, DFCU Financial’s members are entitled to the facts surrounding the benefits of credit union membership — the benefits they’ll be giving up should the credit union convert to a bank.

It is worth noting that among the some 9,000 credit unions in the U.S., fewer than 30 have converted to bank or thrift charters in the past 20 years. Only one Michigan credit union has converted to a bank, and members of Lake Michigan Credit Union defeated such a proposition in 2004. Clearly, there must be many good things about being a credit union.

Value is no small part of the credit union versus bank equation. On average, bank loan rates are higher than credit union loan rates. Bank fees are higher and deposit rates lower, on average, than those offered by credit unions. This competitive advantage is largely derived from the credit union’s tax structure. Because credit unions are not in the business to make profit, they pay no corporate taxes.

What’s more, credit unions best banks in customer satisfaction. For 20 consecutive years, the American Banker has polled credit union members and bank customers, and each year service satisfaction levels are highest at credit unions than at banks. The survey also consistently shows that fees are lower at credit unions.

In today’s difficult economic times, Michigan consumers need access to a strong, convenient credit union system.

The MCUL encourages consumers to make well informed decisions regarding charter conversions. The MCUL has established a Web site at http://www.memberinform.org for this purpose.