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TransUnion Consumers shift payment priorities on bills

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CHICAGO (12/8/11)--Consumers are shifting their payment priorities from paying their mortgage first to paying other bills, according to TransUnion, a Chicago-based credit reporting agency. But the bureau expects the balance to shift again if housing prices go up.

In  its forecast released Wednesday for mortgage and card delinquencies for 2012, the bureau noted that before the recession, homeowners put their mortgages first in line for payment because of concern about their reputation and the emotional attachment to owning--and losing--a home (USA TODAY and MarketWatch Dec. 7).  They protected their home equity first and if money was scarce, they would default on their card payments.

But, when house prices dropped during the recession, many homeowners found they owed more on a mortgage than the home was worth. That and the tightening of credit turned the priority around, and paying off credit cards became first priority, said TransUnion.

The bureau said it expects the balance to shift again if housing prices go up and people begin rebuilding equity in their homes.

It also forecast that the mortgage delinquency rate (where borrowers are at least 60 days behind in payments) will go up to about 6% through the first quarter of 2012, and drop to 5% by the end of 2012. Typically the mortgage rate is around 1.5% to 2%, but it peaked at 6.89% during fourth quarter of 2009.

Banks, working through a backlog of foreclosures complicated by the robo-signing allegations in the industry,  will clear more foreclosures off the books next year, TransUnion said.

Card delinquencies, or payments that are 90 days or more overdue, increased slightly during third quarter and could inch up during fourth quarter 2011 and first quarter 2012. However, they still remain near historic lows.  TransUnion added that bank-issued cards will see fewer late payments.

Kansas CUs have strong 3Q delinquencies drop

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TOPEKA, Kan. (12/8/11)--Kansas credit unions saw gains in loans and assets, as well as a decline in delinquencies, during third quarter, according to a report released by the Kansas Department of Credit Unions.

The department regulates 80 state-chartered credit unions. It reported that assets in Kansas credit unions for the quarter totaled $4.28 billion,  up 7.8% from third quarter 2010 (The Wichita Eagle Dec. 7).  Loans totaled $2.84 billion, an increase of 5.7% over the same period last year.

The delinquency ratios for credit unions dropped to 0.98% from 1.36%, which regulators said was a significant drop in a year's time.  Michael Baugh, KDCU financial examiner administrator, told the newspaper paper that anything below 1% would be significant.

Two factors contributed to the lower delinquency ratio, said Baugh and KDCU Administrator John Smith: a decrease in the total amount of delinquency to $27.8 million from $36.7 million, and the increase in loans, which dilutes the delinquency total. Baugh also noted credit unions have worked hard to collect on overdue loans.

The department also reported membership increased  3.7% to 573,026 members during the quarter.  To access the report, use the link.

BTD organizer in CUNA webinar Every day is Bank Transfer Day

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MADISON, Wis. (12/8/11)--Bank Transfer Day organizer Kristen Christian, speaking Wednesday during the Credit Union National Association webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change," said she's passionate about credit unions, but BTD requires too much of a physical and time commitment to organize each year.

Calling BTD a labor of love, Christian said she spent about 20 hours a day meeting commitments related to the event in the days leading up to Nov. 5. Because of the time commitment she said she didn't think it was feasible for her to hold annually.

"Credit unions and the American public can take it from here," she said. "Credit unions have a powerful message to share within their communities. I believe the motto, 'Every day is Bank Transfer Day' really will come full circle. Every day can be bank transfer day."

Christian will continue helping credit unions and small businesses leverage their messages through social media.

"They make a difference in the lives of the people in their communities," she said.

Christian told the story of what she called "the first American movement organized solely through social media." She endured death threats in helping inspire about 441,000 bank customers to transfer their accounts to credit unions, she said.

She told how the member service representative at her credit union recognizes her by name, a far cry from the $5 monthly debit card fee that turned her from "discontent to disgust" as a Bank of America customer.

She then invited 500 of her Facebook friends to close their bank accounts "independently, with respect and without signage."

She was taken by surprise when a reporter from the Village Voice soon called for an interview, but the Bank Transfer Day movement--and the resulting frenzy--had been launched. ABC World News, National Public Radio,  Fox Business News, The Wall Street Journal and the Los Angeles Times were among the media outlets that interviewed Christian.

Christian said credit unions can leverage the positive feedback from BTD by using social media to build a word-of-mouth following about their lower interest rates on loans and higher rates on checking and savings.

Christian appeared on CUNA's webinar with credit union marketers who shared their experiences from Bank Transfer Day. See related News Now story, 'Marketers in CUNA webinar share BTD stories."

Marketers in CUNA webinar share BTD stories

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MADISON, Wis. (12/8/11)--Act fast and stay on message. Those were the two major lessons credit union marketers shared from their Bank Transfer Day experiences during a Wednesday Credit Union National Association webinar, "Consumers are Fee'd Up With Banks: Let's Help Them Make a Change."

During the webinar, Amy McGraw, vice president of marketing at Tropical Financial CU, Miramar, Fla., shared how her marketing team came up with the idea to pay its members $5 a month to use the credit union's debit card--the exact opposite of the strategy Bank of America nearly employed when it announced it would charge its customers a $5 monthly debit card fee.

Team members agreed on the idea at 4:30 p.m. on a Thursday. By 7 p.m. on Friday, not only had the marketing team put up a microsite and created branding around the plan, it had placed the story with the Miami Herald and the Orlando Sun Sentinel.

Similarly, Pioneer West Virginia FCU, Charleston, W.Va., decided to pay its members five cents each time its members swiped their cards for signature-based transactions.

Both Tropical Financial and Pioneer West Virginia risked the loss of interchange income in hopes of gaining new, but long-term, members.

"We have confidence that our financial advocates can cross-sell new members once they walk in the door," said Lisa Moore, marketing manager of Pioneer West Virginia FCU.

Similarly, McGraw said Tropical Financial has a strong member onboarding process to introduce members to products that fit their demographic profile.

"We heard all these stories about how it was just going to be the unprofitable members leaving banks," McGraw said. "We didn't see those unprofitable members. We had one guy who took out a $1.3 million mortgage on a $2 million house. He knew about us because he saw us everywhere. Our credibility was going through the roof from seeing us in the media."

Anne Shivers, CEO of Carolina Collegiate FCU, Columbia, S.C., led a coalition of 33 North Carolina credit unions that signed a pledge to offer fee-free debit cards.

Among the keys--in addition to their strength in numbers--was the group's unified message. It sent out a single press release with one media contact. The entire organizational process took 48 hours, said Shivers.

The efforts resulted in seven television interviews, 14 newspapers stories, and two radio stories for credit union.

"As a mid-sized credit unions, we couldn't have afforded to buy that kind of advertising, but because there were so many of us it captured more attention," Shivers said. "Credit unions work well together anyway."

The campaign was more about telling the public what credit unions have always done, Shivers said. "But you have to be timely," she added. "You can't wait for someone else to do it."

McGraw, Moore and Shivers appeared on CUNA's webinar with Bank Transfer Day founder Kristen Christian. See related News Now story, "BTD organizer in CUNA webinar: 'Every day is Bank Transfer Day'

Balance Transfer Day linked to credit card promoter

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MADISON, Wis. (12/87/11)--Unlike Bank Transfer Day, which is a grassroots movement with no connection to credit unions, Balance Transfer Day has been linked to a company that promotes credit cards.

Michael Germanovsky, founder of Balance Transfer Day, set up a Facebook page in November urging consumers to switch their credit card debt balances by Monday to lower-rate cards. He designated Dec. 11 as Balance Transfer Day. According to several sources, including The Huffington Post (Dec. 6) and The Baltimore Sun (Dec.7), Germanovsky is editor-in-chief of Credit-Land and BestCreditOffers that push consumers to products, such as credit cards.

Lead generation sites are legal. However, some consumer advocates say the sites aren't concerned about consumers' best interests, The Huffington Post said.

Consumers may believe they are obtaining the best available offer through one of these sites, while in reality they may be getting pushed to a substandard deal, Ed Mierzwinski, director of consumer programs at U.S. PIRG, a nonprofit group that handles consumer issues for the public good, told The Huffington Post.

A wave of anti-bank sentiment, galvanized most recently with Bank Transfer Day Nov. 5-- which led to membership increases at credit unions nationwide--may be resulting in lead generator sites trying to capitalize on frustration and anger over banks' fees and policies, The Huffington Post said.

Survey CUs still at top in customer satisfaction

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DENVER (12/8/11)--Credit unions still score higher in member/customer satisfaction when compared with the banking industry overall average and with big U.S. bank customers, according to a national survey.

Members/customers said they are more satisfied with credit union and banks, and less likely to switch banks than in 2010, according to the 2011 Bank and Credit Union Satisfaction Survey released Tuesday by Prime Performance, which advises credit unions and banks on improving the client experience.

Credit union members rate their overall satisfaction with a net score of 89%, according to the survey. The comparable score for large banks (300 to 4,000 branches) is 80%, and for small banks (banks with less than 300 branches) is 88%. The industry average is 82%. Falling below that were: Bank of America, 73%; Wells Fargo, 75%; and Chase, 79%.

The survey was conducted in August and September 2011--well before big banks' plans to implement monthly debit card fees spawned Bank Transfer Day and consumer backlash. The survey asked questions of more than 8,000 members/customers who had recently been assisted by a representative at a credit union, small bank, large bank or one of the three mega-banks: Bank of America, Chase and Wells Fargo.

A net satisfaction score is the percentage of satisfied members/customers, minus the percentage of dissatisfied ones. A score of 100% is perfect.

The industry average net satisfaction score increased 5% from 2010. Chase and large banks increased faster than the industry rate, at 12% and 6%, respectively. Increasing slower than the industry rate were Bank of America at 3%. Credit unions, small banks and Wells Fargo, all increased 2%.

The survey also showed that some banks, particularly the mega-banks, have not completely won back the loyalty of their customers. Many consumers at big banks believe their bankers may put institutional interests ahead of customers, have concerns about fees, and are not ready to refer friends and family to do business with them, said the research firm.

Banks have made significant progress in creating a more satisfying experience, mainly with younger customers, said Jim S. Miller, president of Prime Performance. "Small banks have pulled even with credit unions among Gen Y and Gen X customers, while credit unions have increased satisfaction among older members.

"Customers [at large banks] told us they experience more problems or had more complaints with the big banks and are not sure the banks are acting in their customers' best interest particularly when it comes to fees," Miller said.

The survey also noted that some credit unions and banks are slipping in some key behaviors that make members/customers feel better about their banking experience, the survey said. Using the customer's name dropped by 5%, and thanking the customer fell by 3% from 2010.

"While credit unions and community banks enjoy high satisfaction and customer loyalty, their larger competitors are closing the gap, especially with younger customers," Miller said. "If small banks and credit unions don't live up to customer expectations and provide a more personalized service, they run the risk of losing their service advantage."

Other survey findings included:

  • Members/customers believe credit unions have the most competitive fees, and Bank of America the least competitive.
  • Credit union members and small bank customers are least likely to experience problems or complaints, while the most occur at Bank of America.
  • Members at credit unions and customers at small banks are more apt to believe employees enjoy their jobs than customers at big banks and mega-banks. Bank of America customers are the youngest, with an average age of 41.2 years (excluding minors). Small banks serve the oldest customer base, with an average age of 47.1 years.

Ohio Shared Branching network is fifth largest in state

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COLUMBUS, Ohio (12/8/11)--The Ohio Shared Branching network includes 289 locations, ranking it fifth in the state for convenience.

That means every Ohio credit union that participates in Shared Branching can say it has the fifth-largest branch network in the state, according to the Ohio Credit Union League (e-Lumination Newsletter Nov. 30).

Ironically, convenience is sometimes cited as a reason not to join credit unions because of claims that they have fewer branches and ATMs than banks.

In Ohio, PNC has 420 branches, Huntington--403, Fifth Third--375, U.S. Bank--334, Chase--292, and KeyBank--241, according to The Columbus Dispatch.

The Ohio Shared Branching network, by the first quarter 2012, will expand by 41, to 330 locations, surpassing the pace of 30 bank branches added in Ohio during the last 18 months, the Ohio league said.

Shared Branching is seeing a growth surge in Northeast and Southeast Ohio. The network connects its members with more than 4,440 locations nationwide.

CU System briefs (12/07/2011)

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  • GREENVILLE, Tenn. (12/8/11)--An Indiana man who was nabbed in Missouri in 2009 after his picture was plastered on electronic billboards across the South (Washington Post and WBIR.com Dec. 6) was sentenced to 26 life sentences for his role in 13 robberies in six states. Chad Schaffner, 39, of Indianapolis, was sentenced in a U.S. District Court in Tennessee for the robbery spree, which lasted four months and included 11 banks, one credit union and one retail store. The robberies occurred in Tennessee, North Carolina, Kentucky, South Carolina, Indiana and Illinois. Fourteen of the sentences are to run in a row. Schaffner's girlfriend, Linda Christina Davis, was sentenced in January to 27 months in prison as an accessory after the fact in two Tennessee robberies. She allegedly allowed Schaffner to use her car and rented motel rooms in various states to help hide him (PRNewswire Dec. 17, 2009) …
  • MADISON, Wis. (12/8/11)--A would-be robber who presented a note demanding money to a teller at Summit CU in Madison, Wis., Friday, fled without the money after the teller dropped the note. The incident occurred at 12:43 p.m.  According to a press release from Madison Police, the teller wasn't sure at first what he had been handed because he accidentally dropped the slip of paper. He bent over to pick it up and saw it was some sort of robbery note, said police spokesman Joel DeSpain (Madison.com Dec.5). When the teller straightened up, the suspect was walking out the door. No weapon was shown …

Bancography Branding index reflects CUs stability

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BIRMINGHAM, Ala. (12/8/11)--An index that ranks the brand strength of all U.S. banks, thrifts, and credit unions indicates this year's credit union rankings reflect more stability in that sector than the commercial bank sector's rankings.

"The stability in the credit union rankings versus 2010 differs sharply from the commercial bank rankings, which saw widespread change from the prior year," said Bancography, a Birmingham, Ala.-based marketing research company in its 2011 Bancography Brand Value Index (BBVI). The index, released Tuesday, notes that 19 of 2010's top-25 large credit unions kept their  top-25 status in the 2011 index.

"This performance also contrasts greatly from the 2010 credit union rankings, where only nine institutions repeated their top-25 positions from the previous year," said Bancography. Only two credit unions dropped out of the top 10 in 2011.

For the second consecutive year, Austin (Texas) Telco FCU leads the greater than $1 billion assets category, followed by Landmark CU, New Berlin, Wis., and Local Government FCU, Raleigh, N.C.  Two credit unions ranked in the top-10 during 2010--Mountain America FCU,  West Jordan, Utah, and University CU, Austin,Texas, dropped out of the top 10 in 2011.

Three credit unions--American Heritage FCU, Philadelphia, Pa.; Caltech Employees FCU, La Canada, Calif.; and Empower FCU, Syracuse, N.Y., moved up from the small credit union tier under $1 billion in assets, and now rank among the top 25 large credit unions in 2011.

Among small credit unions, with assets of $100 million to $1 billion, Complex Community FCU, Odessa,Texas; Freedom CU, Warminster, Pa.; and Gwinett FCU, Lawrenceville, Ga., led the list, with Freedom jumping from its 2010 rank of 28th place. White Sands FCU, Las Cruces, N.M., and America's CU, Lewis McChord, Wash., also returned to the top 25. Navy Army Community FCU, Corpus Christie, Texas, which ranked second in the category in 2010, now ranks ninth in the large credit union category.  2010's first- and third-ranking credit unions, InTouch CU, Plano, Texas, and First Community CU of Houston (Texas), dropped from the top-25 list.

The index ranks financial institution brands by the premium the brand adds to their underlying tangible value. It quantifies the proportion of each institution's long-term value that is attributable to the intangible factors that constitute an institution's brand. These factors include: reputation, service quality, image and market awareness. The brand value index identifies institutions that produce financial results beyond what their capital base, market conditions and competitive environments would predict.  The calculations reward institutions that display consistently strong earnings and a reasonable cost of funds, said Bancography.

For the full report with ranking lists of both credit unions and banks, use the links.