REAL Solutions Program Update

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REAL Solutions Program Update NCUF Board
Meeting June 2007
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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

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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

Estimations Made for Connecticut And Massachusetts
Smallest CU at 1 Million Largest at 1.6 Billion
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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
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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
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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
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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

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Creating Tools
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Sample Results
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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

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Finding the Pricing Sweet Spot

• Pricing Measurement
• Making it Better Versus Making it Worse
• Telling the Story
• Be Bold dont 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

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Sample Results
Ohio Credit Unions Stretch Pay 25 participating
credit unions 21,700 Loans disbursed 7.42
Million in loans disbursed 18/100 x236
versus 2.64/100 (SP) Saving Members 2,475,712
Savings
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
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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
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Forging Partnerships

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

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Opportunities

• 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

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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 doesnt
  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