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REAL Solutions Program Update NCUF Board Meeting June 2007 PowerPoint Presentation
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REAL Solutions Program Update NCUF Board Meeting June 2007. 1. Expanded League Participation. Pilot Leagues Wisconsin, Ohio, Missouri and Maryland/DC In Implementation

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REAL Solutions Program Update

NCUF Board Meeting

June 2007


expanded league participation
Expanded League Participation
  • Pilot Leagues
    • Wisconsin, Ohio, Missouri and Maryland/DC
  • In Implementation
    • Alabama, New York, New Mexico, Connecticut, Massachusetts, New Hampshire, Rhode Island, Arizona, Kansas, Oklahoma, Virginia, Arizona, Florida and Indiana
  • Interested
    • Oregon, Colorado, Montana, Texas, Illinois, Louisiana
  • Approached
    • California
expanded credit union participation
Participating Credit Unions

261 from 14 Leagues

Asset Size

$52 Billion in Assets

Number of Members

6.2 Million Members

Number of Locations

825 Locations

Expanded Credit Union Participation

Estimations Made

for Connecticut

And Massachusetts

Smallest CU at $1 Million; Largest at $1.6 Billion

finding new ways to grow
Finding New Ways to GROW

Western Credit Union

Over 250 New Hispanic Members

Financial Counseling Programs

English Classes

Adapted to the Changing Neighborhood

  • Community First Credit Union
    • 100 New Hispanic Members
      • Mobile Consulates
      • Accepts Undocumented Applicants
      • Hiring the right staff
      • Willing to go Slow and Steady
finding ways to grow
Finding Ways to Grow

Suncoast Schools CU

Provided 11,000 + payday loans

CU Lending staff believe this has had an impact on membership growth. This is a product that is difficult to match.

Andrews Federal CU

Added 2,758 New Members

From a Low-Wealth Predominantly

African American Neighborhood

By adding a new branch with the “right services”

expanded credit union products
Expanded Credit Union Products
  • Education
  • Transaction Products
  • Credit
    • Sub-Prime Used Car Loans
  • Small Savings
    • Step Up CDs
  • Wealth Accumulation
    • Predatory Mortgages
  • Payday Loan Products

New Product Development

sample results
Sample Results
  • Expanded Interest
    • Wisconsin
    • 19 Credit Unions
    • 12 More in Pipeline
      • Tracking issues
      • Overall 45,000 users
      • $12.5 Million in unused RAL Loans
      • Many CU assisted sites
    • 2007 States
      • New York
      • Virginia
sample payday lending results
Sample Payday Lending Results
  • Area of Highest Credit Union and League Interest
  • Over 75 CUs offering low cost products
  • Thousands of consumers/members accessing lower cost products
  • Monitoring to be put in place
  • Systems Group Task Force – Helping to Answer the Questions
    • Data Collection on Credit Union Costs
    • Consider National or State by State Guidelines
    • Talk to CUNA about proposed legislative Language
finding the pricing sweet spot
Finding the Pricing “Sweet Spot”
  • Pricing Measurement
    • Making it Better Versus Making it Worse
  • Telling the Story
    • Be Bold – don’t spin the message but tell it like it is
  • Understanding the Market
    • What the new MAPR may mean to military members
      • Take away any options or create a new market for credit unions
    • Making several existing credit union products un-doable
  • Understanding Pricing
    • Stop measurement by APR but by cost
    • Research several successful models to determine point of breakeven/profitability
    • Does experience in making payday loans mean lower costs to consumers and members
sample results2
Sample Results

Prospera Credit Union

Good Money

5700 Advances Done

$2 Million in loans disbursed

Approval rate is 95%

Unbanked consumers

$9.90 / $100 for 2 weeks

$4.00 in losses

$3.00 TA Costs

909 New Members

$202,000 Saving

  • Ohio Credit Unions
    • Stretch Pay
    • 25 participating credit unions
    • 21,700 Loans disbursed
    • $7.42 Million in loans disbursed
    • $18/100 x2=$36 versus
    • $2.64/$100 (SP)
    • Saving Members
    • $2,475,712 Savings
sample results3
Sample Results

Freedom Loan

St Louis CCU

Started March 1

200 Loans Disbursed

25% plus an annual fee

(Under 36%)

Member Response –

“Thank You

This loan is like a late Christmas Gift – I needed this money and had no where to go but the payday lenders – My Credit Union really

Helped me out”

Quick Cash

Energy Federal CU

Started in 1999

5700 Loans Disbursed

$42 Million Disbursed

$142,500 Fees Collected

$25,000 Charge Offs

Average Loan size $800

Or $3.3 / $100

Credit Union eliminated the additional interest rate in 2006

And saved members

$637,500 Savings

forging partnerships
Forging Partnerships
  • Aspen Institute – Annie E. Casey Fnd.
    • Predatory Car Loan Programs – Designed for Credit Unions
  • Internal Revenue Service
  • NCUA

REAL Solutions

  • Political Advocacy
    • “A seat at the policy table”
    • National Branding and Awareness Campaigns
  • Learning Center
    • Wanted by CUs
  • NCUF
    • Increased CIF
    • Name Recognition
    • “the New and Bolder Foundation”
things to think about
Things to Think About
  • Innovative products and pricing strategies may not be understood in the marketplace
    • Consumer groups and other credit unions may question product pricing strategies and certain terms and conditions
    • What to do with products to close to the pricing edge?
    • Be bold – tell it like it is
  • Need help persuading that “low-wealth” doesn’t mean no ROI.
    • The “untapped” story.
    • Look at Wal-Mart.
  • Opportunities missed
    • Managed growth means some leagues have to wait to implement
  • Adding new and fresh business models
    • Staying relevant by finding the right new products and business models
    • Rapid ramp up has staff stretched to continue learning
  • Institutionalizing Knowledge
    • Need better documentation and knowledge management systems.
    • Still overly dependent on a single person
  • Program versus project
    • Financial and human resources