The slowdown affecting credit unions nationally may have less effect in San Diego. The county’s larger CUs are better able to handle flat times because of community charters that don’t leave them dependent on any one affinity group, and because customers can use their home equity as a piggy bank, reducing the need to save.

In San Diego, some credit unions’ asset bases resemble those at well-heeled community banks. Three credit unions have assets of more than $1 billion, and another handful (Point Loma, California Coast, United Services of America, USE, and First Future) are in the $500 million and up group. Community chartering has allowed San Diego’s larger CUs to serve all comers.

“San Diego is the leader in community chartering,” says CUNA Chief Economist Bill Hampel, “and one of the few markets in the country where there are community chartered credit unions.” To have several CUs in a market with community charters is rare, Hampel says.

Affinity group CUs that cater to employees in a given industry suffer when the affinity group hits a downturn. In a bit of a paradox, credit union customers tend to stop saving but keep spending when they have confidence in their jobs, Hampel says. They start saving when they sense trouble and stop spending.

“When the underlying industry of the affinity group is prospering, a credit union has really strong loans, and a high ratio of loans to savings,” Hampel explains. “When the affinity group is under pressure, deposit growth increases and loan growth slows, a microcosm of classic consumer behavior in a recession.”

But the national trend to less savings and continued borrowing is a sign of consumer confidence. “Labor markets have finally tightened up a bit,” Hampel says.

Why should San Diegans save when their house is doing it for them? “Especially in San Diego, many people for the last few years have decided they really don’t need to save because their houses are saving for them,” Hampel says. He compares the housing value boom to the late 1990s when people saw their 401Ks going up faster than they planned. “It’s the same thing going on with housing, because people say ‘we’re so much closer to our long-term goal than we thought we would be that we can slow down (saving) and still get there.”

North Island Chief Executive Mike Maslak says looking at the home as savings is a double-edged sword. “You want people to be prudent on the one hand, and on the other there’s a lot of built-up equity that consumers can access,” he says. “If we don’t provide that home equity loan, someone else will.”

USE’s CEO Linda Baughman says San Diego homeowners look at home equity as retirement savings. “Where consumers have been able to rely on their homes as their retirement savings, there may have been less pressure to save in another vehicle; they look at the equity in their homes as saving toward retirement.”

— Rich Acello