Maryland CUs shed cats and dogs image to team up with Allfirst Bank

BALTIMORE-Several Maryland credit unions have a bank to thank for their ability to offer members use of almost 600 non-surcharge automated teller machines, a service that CU staff says leads to higher member acceptance of ATM and debit card products. This unusual alliance between Allfirst Bank and a small group of credit unions including Johns Hopkins Federal Credit Union and Hunt Valley-based Point Breeze Credit Union is just the latest development in what has in the past been a mutually beneficial, though quite unlikely relationship The ATM usage partnership actually has existed for several months at each credit union. The bank came calling several months ago with the offer, standing to gain the benefit of monthly fees prepaid for this service. Several CU officials contacted by Credit Union Times declined to disclose exactly how much the fees were, although Johns Hopkins FCU President/CEO Michael J. Mesta said that it is calculated by paying a set fee per cardholder. This set fee individually amounts to less than one surcharge monthly. Without this agreement, each time one of 12,000 JHFCU cardholders decided to use these ATMs, the member would pay more that time than JHFCU pays for his or her usage monthly. Mesta was quick to point out that far from this being a complete departure of the age-old conflicted relationship between credit unions and banks, this particular agreement came about solely because Allfirst had a service needed by Johns Hopkins' members. "We have heard a lot of stories from members who have said that this was the one thing that caused them to sign up for direct deposit with us," Mesta noted. Losing members to Allfirst (previously First National Bank of Maryland) since signing on for ATM non-surcharge usage hasn't been an issue, said Lynn Gregory, vice president of marketing. In 1999 JHFCU experienced a 6.2% rise in membership, which staff believes is due in part to expanded no-surcharge usage of Allfirst's ATMs that stretch across Maryland and into several other states. Usage itself shows that the service is popular. In April, May and June of last year when members were surcharged, they made just 7,863 cash withdrawals from Allfirst ATMs. "Then, we went live with the program on July 1 of `99," Gregory said, and by the fourth quarter, the volume of withdrawals rose to 25,757. "So, you can see that when it was just convenient but our members were being surcharged, they roughly used it 2,000 times a month or so," Gregory said. "Once we told them they could use the machines surcharge free, it went up to 8,000 times a month." And even though Allfirst doesn't receive surcharge fees, they do get all interchange income from this usage, Gregory pointed out. Prior to signing up for the service, JHFCU and Allfirst previously had cooperated in other ways. The FCU had used Allfirst's cash letter service, so that Allfirst "took our check deposits," Gregory said. At some time in the future when the dust settles and if all continues to go well, Gregory said it would be nice if the agreement could be expanded to allow members to make deposits at Allfirst ATMs, in addition to accessing funds. There are no plans for that at this time and because of the expense, Allfirst officials might not be interested in such an option. Johns Hopkins FCU has just nine ATMs of its own. With just over $100 million in assets, it's much smaller than the $17 billion asset Allfirst, according to figures in a Baltimore Business Journal recent story about the unusual alliance. Mesta, who was instantly interested when he first saw what Allfirst was proposing, took it to the JHFCU Board with a suggestion that JHFCU begin surcharging non-members at its own ATMs to partially offset Allfirst's monthly charge. The FCU since has done that. Meanwhile, assessments of Allfirst are surprisingly positive at the Maryland Credit Union League. Allfirst is respected as a locally owned, "community" bank that is one of the oldest banks in Maryland, said Bob Steil, MCUL president/CEO. The bank has made a tradition of cooperating with area credit unions for at least 15 years. "They actually have taken stances in the past against their own trade association in favor of credit unions... " Steil said. "On H.R.1151, the CU Membership Access Act, they actually were very supportive of our position, although we didn't get a letter from the chairman of the board as we have in the past (on other issues). I guess that was just too entrenched." The relationship is cordial enough that Allfirst exhibits at MCUL's annual meetings, however. And too, MCUL invites bank officials to visit league offices several times a year for meetings on mutual concerns. "We actually treat them like we treat any other vendor, although they are not an endorsed vendor," Steil said. "They do a pretty good job, and their approach to credit unions is completely non-bank-like." Point Breeze CU staff said they agree that Allfirst is easy to work with. Their alliance with the bank has helped them market PBCU's Visa check cards. "I worked with their marketing department when we first signed up for this program to design ads, and they were wonderful," noted PBCU Marketing Manager Cindy Penn. PBCU, unlike JHFCU, does not offer this service to its ATM cardholders. Members like the new service, Gregory noted, although at times they get just a bit confused. "We had one member who went to an Allfirst branch and tried to make a transaction in the branch, thinking we were affiliated more than what we were," Gregory noted. "But other than that, we've seen an increase in the number of share draft accounts... our service representatives have been more easily able to sell the accounts because of the expanded no-surcharge ATM service." -lide@cutimes.com