Bankers say credit unions are providing more competition for deposits, according to IntraFi’s quarter four survey of executives from 426 banks. .Forty-six percent saw growth in deposit and lending competition from credit unions, while 36 percent experienced neither. Sixteen percent reported increased deposit competition from credit unions, while 4 percent only saw growth in lending competition.The vast majority of bankers — 86 percent — said uneven competition that places community banks at a disadvantage is to blame for the recent spike in credit union-bank buys. Credit unions are considered nonprofit, and thus are tax-exempt. Last year, credit unions acquired 16 banks, with 2024 seeing a record of 22 such buys as smaller banks value all-cash purchase offers.According to IntraFi, a new record could be set this year. More than half of bank executives predicted 11-20 CU-bank purchases this year, while 25 percent expected 21-30. Eighteen percent predicted 0-10 acquisitions. The survey also touched on the Trump administration’s drive to lower the community bank leverage ratio and capital standards for the largest banks. Late last year, Trump proposed lowering the Community Bank Leverage Ratio to 8 percent from 9 percent. Thirty-seven percent expect the decreases will lead to more pressure on deposit pricing, while 36 percent predicted it would increase lending competition. Thirty-nine percent predicted “little to no impact”. Bankers were relatively muted in their optimism over the proposed changes. One-in-three saw the changes having “little to no effect,” while 32 percent predicted they would undermine competitive balance and financial stability. Forty-two percent of bankers said economic conditions had not changed from 12 months ago, while 41 percent reported better conditions. Seventeen percent said conditions worsened. Forty percent predicted economic conditions would be unchanged a year from now, while 39 percent expect improved conditions. Other report findings included:Three-fourths said their banks’ capital access was unchanged from a year ago, while 21 percent reported a “moderate” improvement. Seventy percent expect capital access will be the same a year from now, while 25 percent predict a moderate improvement. Fifty percent reported an increase in loan demand from 12 months prior, while 29 percent said it was unchanged. Twenty-one percent experienced a decrease. Fifty-seven percent predicted an increase in loan demand over the next 12 months, with only 9 percent expecting a drop. Seventy-eight percent had lower funding costs than 12 months ago, while only 11 percent saw an increase. Sixty-nine percent expect funding costs will fall in the next 12 months, with only 8 percent anticipating an increase.
