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Doing Well by Doing Good Grow Your Credit Union

By Serving Expanded Markets Lois Kitsch lkitsch@ncuf.coop

Today’s Conversation Doing Good is Good Business  Credit Union Growth Examples of what credit unions are doing to grow by offering services to new market niches including young people, Immigrants and low-wage working families. Sustainable Business Models Talking through sustainable business models for non-traditional credit union products such as payday loans, non-prime car loans and innovative savings accounts.  Where to Go – Find the open source tools to help your credit union develop Products and services to serve low-wealth households

Doing Well by Doing Good – The Spectrum Credit Union Story

What does a poor or mediocre score cost?

Emily

Karen

750

650

Credit Card Rate – 9.9% Auto Loans – 5% Mortgage one – 5.5% Mortgage two – 5.5%

Credit Card – 19.9% Auto Loan – 8% Mortgage one – 7.375% Mortgage two – 7.375%

What does a poor or mediocre score cost?

Emily

Karen

Cost of Poor Credit

Emily 70

$39,600 $21,166 $174,760 $417,616

Karen 70

Credit Card Interest Auto Loans Mortgage One Mortgage Two

$79,600 $34,653 $243,020 $594,572

100 Points Cost Karen $ 298,704

Think of the impact of Dorothy’s credit score on her access to financial services

Continuous set of services to allow members to move from step to step, no matter where they start

Alternatives FCU Ithaca, New York

Product Innovations •Provide Right Time Financial Education •Transaction Services •Out of the box Savings •Access to affordable loans – i.e. payday loans alternatives, non-prime auto loans …

•Wealth Building Products such as student loans and mortgages •For people who most Need access to affordable financial services

U.S. Adult Population by Banked Status

Note: Unbanked consumers are those with no checking or savings account. Underbanked consumers are those with a checking or savings account who have made one or more nonbank financial transactions in the past 30 days. Source: CFSI Underbanked Consumer Study, 2008

Underbanked Market Size The total underbanked population consists of 106 million adults or 49% of the population ages18 & older Florida’s unbanked population is 5 million people or 27% and the underbanked population is closer to 9 million people Source: 2008 CFSI Underbanked Consumer Study

Florida Today

Employment and Benefits 6.2% unemployment 25% working in low wage jobs 36.4% participate in retirement programs 51.4% employers offer health insurance (24.2% pay for their own insurance and 24.4% uninsured)

Home Ownership 65% Home ownership 7.3% foreclosure average (compared to nation wide average of 3%)

22% High cost mortgages http://scorecard.cfed.org/state_data/florida.php Visit - www.realsolutions.coop

% of Asset Poor Households in Florida

Low Wealth does not always equate to low income.

11%

3%

46%

$24,800 to $44,800 $44,801 to $68,800 $68,801 to $103,000 >$103,000

22% In Florida, 22% of households earning more than $44,000 and 3% earn more than $100,000 are asset poor.

<$24,800

36%

REAL People

At the right price and terms!

Appropriate Products and Services

Membership growth

Customer first? Then a member?

Check Cashing Customers Grow into membership Prepaid Cards

VITA All Cash Global

To learn more…

Second Chance Checking A REAL Solutions® Implementation Guide

Visit the RS Impact Center www.realsolutions.coop

Want to know more?

Three Free Webinars - Provide Tax Preparation Assistance through Voluntary Income Tax Assistance Programs This series is exclusively for participating REAL Solutions® credit unions and leagues.

Tax Preparation the Credit Union Way Nancy Pierce Field Coach – REAL Solutions

Visit www.realsolutions.coop

Right Time Education – It Matters

FICEP Step WAY out side the box education.

To learn more…

Filene Research Institute www.filene.org

www.realsolutions.coop League Highlights

Let’s Talk Saving Programs Savings Matter

Coming Soon

Savings Toolkit – and Webinar Series Visit www.realsolutions.coop

Let’s Talk Loan Products

Non-Traditional Loan Products

Payday Loans – Small short term loans with high cost and balloon payments often causing a cycle of debt. Users: Are banked – 100% have a bank account May be homeowners (42%) Are often under the age of 45 (median age is 32) Are women with children at home (62%) Are of low to moderate income – 50% have incomes from $25,000 to $50,000 Credit Unions are moving members to alternative short term loan products - saving their members big money while at the same time pushing revenues to their bottom line.

Want More info?

Visit www.realsolutions.coop for a comprehensive Toolkit on how REAL Solutions Credit Unions Provide short term loan products to their members.

Contact League Liaison Natasha Melugin

Non-Prime Auto Loans Who Needs them?

•88% of Americans drive to work •Reliable transportation provides job, education and family opportunities •Non-prime borrowers traditionally not served by credit unions Credit unions are missing a huge business opportunity -

Visit the Impact Center to review the 7 lessons learned!!

Want to know more?

Four Free Webinars - Provide Affordable Auto Loans To Non-prime Borrowers and Make Money for you CU This series is exclusively for participating REAL Solutions® credit unions and leagues.

Steer Clear of Predatory Car Loans With Bill Myers Field Coach – REAL Solutions® Senior Fellow, Aspen Institute

Visit www.realsolutions.coop

Join us at REAL Solutions

To Learn more contact Laura Vann or Adena Whitman LSECU Visit http://realsolutions.coop

Lois Kitsch REAL Solutions 407 616 2409 lkitsch@ncuf.coop