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Anyone involved with credit unions knows how the entire banking industry feels about credit unions, right? Not necessarily. The very largest banks, for example, could care less about credit unions. Credit unions as an industry and individually are small potatoes and are not worth bothering with, at least in the opinion of the banking behemoths. Then there are those credit unions that continue to do business with individual banks. In some communities, banks and credit unions get along just fine thank you. Do you think banks that have credit unions as profitable customers dislike all credit unions? Hardly! Even the banking trade groups have more daunting challenges facing them as industry spokespersons than the so-called credit union threat. Nevertheless, the American Bankers Association (ABA) leads the charge against credit unions. They do so not for the sake of their Citigroup, Bank of America, et al members, but to show their Main Street USA bank membership that ABA is not just for the big guys. What brought all of this to mind recently were two highly visible advertising campaigns. One involved the traditional foes, banks and credit unions. The other, banks versus banks. In looking at the advertising in both situations, it became clear that deep-seated animosity actually is alive and well in the world of credit unions and banks, but that in both of these cases, a common enemy plays a key role. That common enemy of CUs and community banks is the growing number of megabanks, the ones sweeping across the country’s landscape gobbling up other banks, closing branches, laying off thousands of workers, making millionaires out of top officials, and raising fees for confused customers. The first ad campaign featured television commercials about banks. It was run by the Utah League of Credit Unions. These TV ads got noticed almost immediately. Banking representatives complained to the regulators that the ads allegedly made it appear that banks in Utah were unstable. The TV spots, intended to be humorous but with a bite, depicted a bank official supervising sign crews as new signs were installed at his bank. The constant name changing reflected the bank’s new owners taking over on a regular basis. While the bank executive looks embarrassed over the signage musical chairs, the announcer says: “If you’re still not convinced that Utah’s credit unions are our most stable, enduring financial institutions, what are you waiting for.a sign?” According to Utah League officials, the ads were meant to take a light-hearted jab at the Utah banking establishment for succumbing to invading out-of-state banks. This was not about all credit unions attacking all banks in the state. Rather, it was about carpetbagger banks invading local turf. Upon closer examination, it became clear that this battle was not between credit unions and banks, but between credit unions and very large banks. In this particular battle, credit unions actually found an ally of sorts in the community banks in Utah. Naturally these banks found it difficult if not impossible to say so. The irony is that while the larger banks could care less about credit unions, they also could care less about the many smaller banks in Utah. The second ad campaign was generated by still another banking industry mega-merger, this one in the Southeast. It involves First Union Corp’s plan to take over Wachovia Corp. The planned coupling became embroiled in controversy when SunTrust, Inc. of Atlanta decided that it also wanted a marriage with Wachovia and made a hostile takeover bid. A high profile free for all resulted that is still playing out in the trade and mainstream business media. This includes full-page newspaper ads by all three giant banks that are in the fray. Meanwhile, community banks see the turf battle as a golden opportunity to do some advertising of their own. Among the many newspaper ads run by locally owned and operated banks caught in the big banks’ merger crossfire, one featured this headline: “Is your bank too busy worrying about its own business to take care of yours?” The number of similar anti-megabank ads has increased markedly in recent years. The main thrust of these messages, “we’re here to stay,” sounds very much like what the Utah credit unions are saying. Somewhat akin to the situation in Utah, the big bank squabble in the Southeast clearly shows that these large banks could care less about small banks in the region. It appears clear in this situation, too, that small banks and credit unions share a common enemy, the megabanks. Which leads to this question: Because they do share a common foe, is it possible for community banks and credit unions to join forces for the benefit of both camps, such as jointly taking on harmful megabank initiatives? After all, except for the not-for-profit versus for-profit structure, credit unions and community banks have a great deal of obvious things in common that even goes beyond a mutual dislike and distrust for the big banks. But such an alliance probably won’t happen for one important reason. Credit unions pose the biggest threat for market share not to the large banks but to the community banks. It is the community banks, a one-city operation for example, that wake up every morning to a thriving credit union just down the street, often serving members that may also be bank customers, or could be. Despite the local competition hurdle, a number of credit union CEOs have told me that they wish someone could convince the credit union industry’s state and national trade groups to at least start a dialog with small banks. What might come of such discussions? Maybe nothing. Or, maybe some ways may be uncovered whereby credit unions and community banks can learn to coexist as competitors as well as find ways to cooperate, such as in the legislative arena, as allies? Having a common enemy could pay dividends. It never hurts to at least talk. Comments? Call 1-800-345-9936, Ext. 15, or Fax 561-683-8514, or E-mail [email protected]

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Peter Westerman

Credit Union Times

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