Maine credit unions are reporting an uptick in membership, deposits and loan approvals, signs that they are more popular than ever.  At least one analyst believes consumers now view credit unions as a much safer alternative to mutual funds, and a way to earn more interest than many banks can offer.

Lynn Atherley and her husband Scott are longtime members of the University Credit Union in Orono. Lynn says she used to go to a traditional bank for financial services, but she grew tired of the fees. "It's here, it's local, it's more of a shareholder type of a situation and banks just feel a little bit more cold to me."

The Atherleys are looking to sell their home and were recently pre-approved for a new mortgage. They also just took out a $3,400 home improvement loan to put a new roof on the house they're about to put on the market.

"The people that we talked to helped us understand what we could afford, helped us understand what would be the best scenario for us in terms of payments, in terms of money down and things like that," Lynn Atherley says.  "So it's such a user-friendly place because the people really help you understand what you can do with your money and what options are available to you."

It seems the Atherleys aren't alone in feeling safe with a credit union. In the past six months, membership in Maine's 67 credit unions has grown just over one percent. And in the past year, loans have increased by four percent and deposits by almost eight percent.

John Murphy, President of the Maine Credit Union League, says the statistics show that people appreciate that credit unions are shareholder-owned and don't make risky investments.

"If you think back to last fall, people were concerned about the safety and the soundness of their funds and their financial institution, and credit unions provide the latest financial services for consumers, there are many locations through the shared branch network," Murphy says.  "So credit unions became a real, viable economic, good option."

Murphy points out that an increase in deposits at credit unions doesn't necessarily mean customers are depositing less at banks or moving their dollars from banks to credit unions. "I think what it indicates is people were moving them from maybe more risky investments, wherever that may be, and putting them into their accounts at local financial institutions."

And this year's statistics from Maine banks show that's true.  "On the deposit side, we have had surprisingly strong growth," says Chris Pinkham, President of the Maine Association of Community Banks.

"For the first six months, looking at 21 of the 29 Maine-based banks, the growth was up 3.8 percent. Now for comparison purposes, in all of 2008 it was only up 4.1 percent, so that's very strong."

Gerard Cassidy, a director at RBC Capital Markets in Portland, says that's a national trend. "We have seen in the U.S. banking industry a very large surge in deposits in 2009 due to an increased concern about money market mutual funds and other non-traditional savings vehicles, or investing vehicles like the stock market."

Cassidy says coverage levels under the FDIC's deposit insurance program have gone up, which also makes consumers feel safer. He also notes that for the first time, credit unions and banks are offering higher interest rates than money market mutual funds.

And in many cases, he says, credit unions offer the best interest rates. "Credit unions tend to pay a little better interest rate than a commercial bank or a savings bank because most credit unions are not-for-profit and they're able to offer a more attractive deposit yield than a commercial bank that may be publicly-traded or owned by a publicly-traded company."

Cassidy says he's not aware of any empirical evidence that more people are choosing credit unions over banks and other financial institutions, but he points out that it's easier to join a credit union now than in the past, when credit unions were exclusive to smaller groups of employees, universities and other organizations.