06 Jul The Credit Union Difference
Credit Unions Are Intentionally Different
Credit unions are different from banks in significant ways. Those differences were made intentionally, with the membership, as the focus.
For one thing, credit unions are not-for-profit cooperatives owned by their members. Therefore, credit unions try to avoid doing anything that might harm their members. In contrast, for-profit institutions, like banks, focus on generating income for their shareholders.
To generate that income, banks sometimes engage in lucrative, but risky practices, that credit unions avoid. Credit unions serve the needs of the membership and our income goes towards providing products and services that benefit the members.
Credit unions are also better able to weather tough economic periods. Credit unions do this by staying well-capitalized. Western Sun is considered a “well-capitalized” credit union with a capital position of 15.68% at the end of 2022. To put this in perspective, the National Credit Union Administration considers any credit union with a minimum capital ratio of 7.00% a “well-capitalized” credit union.
When members are unable to pay their loan payments, credit unions have less money to loan to other members. The credit union model is designed to provide adequate capital to protect the credit union operation from loan losses. Thanks to a strong capital position, credit unions can live with loan losses without suffering dire consequences. In the for-profit sector, it’s more difficult. If their stockholders see earnings go down or they don’t continue getting high rates of return, the bank could suffer. Credit unions, on the other hand, can continue to serve their members even if they’ll make a little less money in the process.
In addition, the money you have in a federally-insured credit union is backed by the NCUA (National Credit Union Administration). Individual accounts are insured up to $250,000, and members’ interest in joint accounts is insured up to $250,000. Federal insurance guarantees that the “full faith and credit” of the U.S. government stands behind the deposits. Members of federally-insured credit unions have never lost a penny of insured savings.
The philosophy of the credit union movement is “People Helping People.” Your credit union was established for You. We’re here to provide you, your family, and our community with a secure place to keep and grow your money.