In Hollywood, all publicity may be good publicity, but that entertainment tenet certainly doesn't hold up in the financial services sector. Credit unions have to be careful to shape their perception in the press as consumer-friendly institutions that exist to advance the financial standing of their members. That's not an easy task and the industry as a whole can be hurt by individual stories on specific credit unions. Just last Sunday I cracked open my newspaper only to find the following front-page headline: "Credit Union Runs Into Red Ink; Expansion Leads to Risky Loans." (It just goes to show you how many negative words an editor can fit into a headline.) The story goes on to chronicle the financial difficulties at First Atlantic Federal Credit Union. It was a very interesting story and the reporter had some legitimate news hooks. For years, First Atlantic primarily served the military personnel of the Army's Fort Monmouth, but in 2003 it opened up its membership with a community charter. This appeared to be a very fortuitous move given that Fort Monmouth is one of the military bases scheduled for closure. However, the CU's expansion took it into indirect lending where it ran into considerable trouble. In a description that made me cringe, a member talks about how he was surprised how easy it was to get a loan from the credit union at a dealership, considering he had a shaky credit history. I'll spare all the gory details, but the story goes on to talk about First Atlantic's plummeting capital ratio (2.63% as of September) and all the charge offs and delinquencies related to auto loans. If I was playing on the PR team of the bankers I would have a field day with this piece because it highlights how a credit union that went beyond its original field of membership, or as the bankers would say an "expansive" credit union, fell on its face by making risky loans. Also, the rapid decline of this CU's capital (it was 8.3% in '03 and 7% in '04) doesn't do much to advance the case for loosening capital level requirements for credit unions. The credit union's leadership team made a huge mistake in this story that I hope I can dissuade others not to make. Neither the CEO nor any members of the board would agree to be interviewed. I can't stress enough what a mistake in PR judgment that is. The leaders should stand up and be counted and focus on their plan to get the credit union's capital position back in line – there is a plan, according to NCUA. When you hide, you raise even more doubt among the readers, your members. Sure enough, the reporter found an economics professor, who also happens to be a credit union board member, to talk about credit unions' nonprofit structure and that credit unions can take on more risk, but not to the point that it's "financially unsound." The credit union's leaders should have been there to make their case. Now let's look at a more national example of credit union publicity. The Wall Street Journal ran a lengthy front-page article highlighting the ongoing battles between credit unions and banks. As far as newspapers and the financial sector go, the Wall Street Journal is about as big a stage as you can get. Overall, it was a solid story. It highlighted everything from the lawsuits in Utah to last year's House Ways and Means hearing on the tax-exemption. You would expect solid reporting from the Wall Street Journal, but it wasn't without its flaws. It talked about credit unions using their tax-exemption advantage in "muscling" out banks by offering very low rate loans, such as "low-rate credit cards." The fact is credit cards make up only about 5% of the industry's loan portfolio, and more and more credit unions have elected to sell off their portfolios – it's certainly not an area where most CUs beat banks. The story also calls serving the poor a "requirement" of credit unions. It describes some credit union executives as "empire builders" as they take advantage of "loosened" field of membership requirements. That sounds like language you'd hear from ABA Chairman Harris Simmons, who was featured in the story, but it wasn't attributed to him. At another point in the story regarding Utah, the reporter states, "The Utah unions…." Credit unions have enough comparison problems with labor unions, the Wall Street Journal should have caught that one. But aside from some questionable language here and there and a few errors, the reporter used CUNA CEO Dan Mica and Simmons to provide both sides of the story. In both the Wall Street Journal story and the local press story on First Atlantic, there was one common thread. Both reporters took the time to offer some history on credit unions, why they were formed, the fact that they are tax-exempt, etc. This is typically done in credit union stories because they're not as well-known as banks. So whether it's a national story or local story, every credit union is affected by press coverage. Credit unions everywhere should be ready and willing to deal with the press because every time you do you are representing the entire industry. Credit unions and credit union organizations should make room in the budget for a PR professional or, though not as good, keep a PR firm on retainer. It's no longer acceptable to lump PR in with the marketing department. It is a special skill, special discipline that can make the difference in how your credit union comes across in a story – and that affects the entire industry. I don't want to have to say I told you so a few months from now, but with this continued outbreak of credit card fraud, it's only a matter of time before credit unions are showing up left and right in stories about exploding card fraud. Will the industry have the right PR pros in place to handle it? -

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