A nationally representative survey of 1,155 consumers found a lack of consumer interest in banking with Bank of America, Chase, Citibank and Wells Fargo.
One-half of consumers have a banking relationship with one of these banks. Raddon Financial Group, a strategic business unit of Open Solutions Inc., found that while 63% of current customers indicated they are either "extremely likely" or "very likely" to remain customers, the remaining 37% are less likely to continue banking with them. Twelve percent said they were "not very likely" or "not at all likely" to remain customers.
When noncustomers were asked how likely they were to become a customer of one of these banks, none indicated they were "extremely likely" to do so, and less than 1% said they were "very likely" to become a customer. Eighty-eight percent said they were "not very likely" or "not at all likely" to become a customer.
"Consumers are clearly reacting to the financial crisis, which appears to be seriously limiting [these banks'] ability to acquire new customers," said Bob O'Meara, vice president, director of research for RFG.
When asked about the impact the banking industry crisis has had on their future choice of financial institution, 63% of respondents said they would consider a "local bank," and 43% cited a credit union as their preference.
"In order for community banks and credit unions to attract customers from [big banks], they'll need to be strong in technology, convenience and service," O'Meara advised.
Unplugged ATM Leads
To Arrest of N.Y. Man
A man from upstate New York was arraigned on June 12 before the state Supreme Court on charges he stole $75,539 from the Syracuse-based NPG Federal Credit Union (now called FocalPoint FCU) from March 2006 through July 2008.
Jason J. Monto, 31, of Liverpool, N.Y., allegedly took advantage of a glitch that allowed him to repeatedly withdraw money from a local ATM machine during nonbusiness hours when it was not directly linked the credit union's records. He reportedly only had $5 in his account.
Monto was indicted two weeks ago on felony charges of second-degree grand larceny and first-degree falsifying business records, according to Assistant District Attorney Beth Van Doren. "Obviously there are hopes of some restitution, but for such a large amount it is probably not a possibility, so we have to look at other options," Van Doren said.
Monto's attorney did not return calls for comment nor did the credit union involved.
Monto is scheduled to return to court on June 26.
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Members United Cuts
Members United Corporate Federal Credit Union announced a second round of layoffs and other structural changes in a June 12 letter to members, saying the changes will cut costs and position the corporate to rebuild capital.
CEO Joseph Herbst said 39 employees will be laid off throughout 2009. Combined with layoffs announced in December 2008, Members United will shave 38% of its workforce by year-end, cutting operational costs by $18.9 million per year.
The Warrenville, Ill.-based corporate also announced it will shutter its Minnesota office and reduce office space in Massachusetts and Indiana, transitioning some employees to home offices. In addition to cost savings, Herbst said shorter commute times for home-based employees would result in "improved availability" to members.
"These actions are central to positioning your corporate to implement its evolving mid-term strategic plan (2010-2012). With a focus on profitability to grow retained earnings and thereby achieve a 5% capital ratio, that plan seeks to rebuild Members United to fit the new market realities," Herbst said in the letter.
The $9.6 billion corporate told members May 5 it expects to record $511 million in losses, wiping out nearly 60% of total capital, including $382 million in retained earnings and member paid-in capital and an additional $129 million in member capital shares. Roughly half of the losses are due to Member United's investments in mortgage-backed securities and Lehman Bros. The other half were lost at U.S. Central.
Members can expect a "smaller, leaner" corporate and changes to products and services as well as the manner in which they are delivered, Herbst said.
"The world has changed, and we recognize that we must change with it," he said. "Our mid-term strategic plan will be finalized within the coming months, and submitted to the board of directors for approval. In the meantime, we will not stand still."
Three Plan to Merge
Three Long Island credit unions have started the merger process.
The boards of directors of North Shore LIJ Health System Federal Credit Union, LIJ Employees Federal Credit Union and Hillside Hospital Federal Credit Union approved plans to merge.
The newly merged credit union will keep the name North Shore LIJ Health System Federal Credit Union, as a way to be more inclusive to all members. If approved by the NCUA and the members of LIJ Employees and Hillside Hospital FCU, the credit union will have assets of over $97 million and serve 17,000 members.
Currently, North Shore LIJ serves more than 11,000 members, has 13 employees and holds assets of over $59 million. LIJ Employees FCU serves more than 4,000 members, has six employees and holds over $24 million in assets. Hillside Hospital FCU serves more than 2,000 members, has six employees and hold assets of over $14 million.
The merged organization will have branch locations in Jericho, Manhasset, New Hyde Park and Glen Oaks.
The credit unions have retained D. Hilton Associates Inc., a consulting firm based in The Woodlands, Texas, to assist in the merger process.
30 Graduate CU Training
Thirty more credit union professionals are now passionate credit union advocates after graduating from Credit Union Development Education training in Delavan, Wis., early this month.
Stacy Dugan arrived at DE training with limited knowledge of credit unions, having served as executive director of the Michigan Credit Union for only three months. "My plan was to listen and learn. I knew the people there would have plenty of great experience, insight and ideas that I could bring back to my own work," Dugan said.
In contrast to Dugan, Angela McCathran, president/CEO of People's Trust Federal Credit Union in Houston, brought almost 30 years of credit union experience to the training classes. She felt she was still able to gain fresh insight regardless of her extensive background. "My experience at DE training gave me the opportunity to discover what I had forgotten and has given me a whole new perspective on my role in the credit union movement," McCathran said.
Credit Union Times' independent sales rep, John Wiley of the R.W. Walker Co., Inc., completed training during this session.
The second of this year's scheduled DE training classes will take place from Aug. 12-18 at IslandWood on Bainbridge Island in Washington.
Experian Now Offers
Small Business Scores
Members of Experian's network will have access to three new credit scores that aim to identify financial accounts that are most likely to become delinquent.
Powered by Experian's business data and analytics capabilities, the new portfolio risk scores help clients reduce costs and maximize revenue by allowing them to address accounts that could pose future business risks, the company announced on June 15.
Experian's small business credit share portfolio risk scores provide three model options: The all financial score, which identifies businesses that are likely to go delinquent on a financial account within the next 12 months; the commercial credit card score for those businesses that are likely to go 90 days delinquent on a commercial credit card account at least once as well as an account that will go 60 days delinquent two or more times within the next 12 months; and the retail credit card score, which is similar to the commercial credit card score but is focused specifically on commercial retail card accounts.
Colorado CUs Make
Deposits in Food Banks
Colorado credit unions began helping food banks last week following urgent appeals from a Denver agency facing increased demand.
Galvanizing its members and employees into action, the Credit Union Association of Colorado said it was putting out the word to help stock food bank shelves across the state in addition to that of the Denver-based Food Bank of the Rockies.
"This all came together very quickly after a local TV station interviewed one of our CEOs who was alerted to the problem," said a spokeswoman for the CUAC in commenting on the 15-CU collection campaign.
The 15 participating CUs, now working with the food banks in distributing the cans, are located in Front Range and Western Slope communities, said CUAC.
The project came together early last week after the Food Bank of the Rockies reported 12% of Colorado families were "unsure where they will find their next meal."
Rainy Thoen, president/CEO of Community Choice CU of Denver, commented on the food drive on a Fox TV affiliate in Denver.
"We're doing all we can to address the financial concerns of our members by easing the credit crunch, but there is a need beyond that to help families who have fallen on hard times and are finding it difficult to simply put food on the table," said Thoen.
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