HACKENSACK, N.J. — Retired high school teacher Ed Bialkin of Ramsey, N.J., has been a member of Paragon Federal Credit Union for more than 30 years. It’s where he got the mortgage to buy his first house, and it’s where he’s banked for most of his adult life.
The mortgage has long been paid off, and now his pension and Social Security checks are direct-deposited to his Paragon checking account. The credit union’s automatic bill pay service takes care of his utility bills and car payments. He also has a wealth-management account with Paragon, which has nearly 49,000 members.
But Bialkin is considering switching to a bank because he said service went downhill last year at the Paragon branch he uses. Teller lines are longer, and the staff seems less interested in answering his questions, he said.
The University of Michigan’s American Customer Satisfaction Index report released in December gave credit unions a score of 80 out of a possible 100, down from 84 in each of the two previous years.
As usual, the nation’s largest banks — including Bank of America, Wells Fargo and JPMorgan Chase — fared much worse than credit unions. But credit unions — normally the customer satisfaction champs among financial institutions — slipped into a tie with small banks.
Many credit unions have reported stunted earnings and capital depletion as a result of the recession, rising bad loans and regulatory pressures, said David Van Amburg, managing director of the American Customer Satisfaction Index. Unlike banks, he noted, they cannot raise capital by selling stock. The result often is staff cuts, fee increases and more unhappy customers.
“We’re seeing a cutback in service from their lofty ratings of two years ago,” Van Amburg said. “While credit unions generally survived the 2008 financial crisis much better than the banks, we are learning now they weren’t completely immune to it.”
“Credit unions are confronting many of the same regulatory obstacles as banking counterparts,” said Greg McBride, senior financial analyst at Bankrate.com. “There will be some parallel in fee trends,” he said.
Yet there are bright spots. Deposits and assets grew and their return on average assets, a key measure of financial health, increased last year to 0.51 percent from 0.18 percent in 2009.
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