Initially an institution on paper only, the credit union had no office, no employees and nary even a deposit slot. Automatic payroll deductions accounted for more than 98 percent of all savings deposits. Membership in the credit union was restricted to university employees and their families. Yet even with these limited services, the credit union grew and grew, perhaps because the idea itself had proved so successful elsewhere. The first credit union was established in Germany in 1848, when the members of a town banded together to pool their savings and make loans to each other at a low interest rate.
Credit unions are democratic.
The board oversees the administration of the credit union, which currently includes two branches, one administrative office and 32 full-time employees. Currently, the Hopkins Credit Union keeps reserves equal to 12.5 percent of its assets, a fairly conservative ratio that insures fiscal solvency in even the most hard-pressed economic times. Conventional banks, by contrast, often have reserves of only 3 to 4 percent of assets, said Mesta. In recent years the credit union has made inroads into the highly competitive home equity loans, initially offering the loans at prime plus 1 percent. Anyone who had signed an agreement with us previously had his or her loan automatically lowered to the new rate.