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A blog about the economy and the Sacramento-area real estate market.

June 24, 2010
Sacramento credit union deposits signal a stronger consumer

The California Credit Union League published some interesting stats this afternoon showing a pretty sizable jump in deposits the first quarter of 2010. It's touting the deposits as signs that consumers may be about to unleash their spending.

"We're hoping these small and subtle buildings-up over the last few quarters will portend very good things in the coming quarters," said Daniel Penrod, the league's senior industry analyst. "That's in terms of comfort and people feeling confident enough in their employment situation that things won't get worse. They can use the savings in terms of bringing back retail and having an impact on the job numbers."

The CCUL reported $1.9 billion in new net credit union deposits statewide in Q1. Nearly a fourth of that - $501 million - flowed into Sacramento credit unions.

Banks, meanwhile, saw their deposits shrink by 0.35%

I asked Penrod if that might partially be about people checking out of big banks over TARP and the Wall Street meltdown. There's a movement for people to register their disapproval of "too big to fail" by moving their money out of the biggest banks.

He said, "It appears to point to individuals taking initiative with their finances. For a long time people got with one institution and and rode it for the rest of their lives. Now, with all the information available they are looking at finances and deciding what's best for them. We're seeing a shift to individuals taking control of their finances.

"Confidence and trust is huge," he said. "With the big bailouts, the isues with WAMU and IndyMac, the state was shaking. It remains a very tentative situation."

Finally, the CCUL noted that use of ARMS is up in Sacramento. Credit unions originated an extra $27.8 million worth of adjustable-rate loans in Q1 - and $31.8 more in fixed-rate loans than the previous quarter.

I am not sure this is something to rave about - another rise of ARMs.

But they're spinning it as a sign of confidence in homebuying.

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