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Credit Unions Vs. Banks - A Message From Our President


Last week the leaders at Rivermark joined over 5,000 of our credit union colleagues nationwide in Washington, DC for the CUNA Governmental Affairs Conference (GAC). It’s almost impossible to attend this conference and not think about how special credit unions are in terms of the vital low-cost financial services offered and commitment to community support.

Credit unions are not-for-profit, member-owned financial cooperatives. We are owned and governed by our members. If you consider generally what motivates businesses, typically motivations lead to what’s in it for the owners of that business. In the case of credit unions, we are owned by our members, so the decisions we make are made in the best interest of you.

As a result, we are able to provide you with consistently lower loan rates, higher deposit rates and lower or no fees. We do that because you are our owners and we want to do what is in your best interest. After we pay expenses and take care of you, we transfer the remaining earnings (net income) into our Capital (reserves) so that we can meet regulatory capital requirements and set aside a financial cushion for unforeseen losses. That capital ensures that we remain a healthy credit union, able to serve you and your family members for many years to come.

Banks, on the other hand, are owned by stockholders. Those stockholders are for the most part, not customers of the bank. The decisions made by banks are done in the interest of their owners (the stockholders), not their customers. That’s a key difference between banks and credit unions!

And it’s for that specific reason that banks rightfully pay taxes on corporate earnings, while credit unions do not. In fact, when you think a little bit more about it, there are really no profits to tax at credit unions! Any “profits” are returned to our members/owners via better rates and lower or no fees! Congress ratified the credit union tax treatment on corporate income in 1934 and reaffirmed it in 1998 via HR1151, the Credit Union Membership Access Act! Congress has spoken, and continues to support Credit Unions!

Last week I met with Oregon Senator Jeff Merkley (pictured), who is a supporter of the credit union tax exemption. Thank you choosing Rivermark as your primary financial institution.


Scott Burgess