Good Problem to Have: CUs Expect Influx of Deposits from Autoworker Bonuses (Misc News: March 13, 2012)
Credit unions, particularly those in Michigan that serve large numbers of autoworkers, are facing a problem they haven’t seen in a while: New deposits from record bonuses from General Motors, along with smaller bonuses from other automakers.
GM announced last month that it would pay bonuses to hourly workers of about $4,000 and up to $7,000 for white collar workers.
According to CU Journal, many credit unions with large contingents of autoworkers among their members expected them to bank much of the money rather than pay down loans or take out new loans.
It’s one of those good news/bad news situations for Michigan credit unions. While the return of bonuses is good for a state that is so dependent on employment from automakers, credit unions have to find a way to keep their asset ratios in line with a large influx of deposits.
The story prominently features Genisys CU and is datelined out of Auburn Hills, where Genisys is based.
Lon Bone, vice president of public relations at Genisys, said he expects as many as 1,500 of GCU's 127,000 members will receive bonuses ranging up to $7,000. But he isn't expecting that to translate into pay-downs on loan balances or new loans with bigger down payments.
"I haven't heard anybody tell us this yet, but with people seeing where gasoline prices are going right now, my gut feeling is that the majority of these dollars are going to be put into savings accounts," Bone said.
At Security CU in Flint, another GM stronghold, CEO Christopher Estes said the staff was considering plans to tailor promotions to reach GM employees. He said that as many as 5,400 of its 54,000 members work for GM.
"We're not looking for deposits," Estes said. "We're flush with liquidity; what we need most are loans. We're going to talk to members about the age of vehicles on the road and using that (bonus) as a down payment on a vehicle that we could finance for them. But first and foremost we'll look out for the member's best interest."
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