http://www.buffalonews.com/businesstoday/localbusiness/story/660358.html
Two of the CU’s mentioned in the article are our customers here at work.
Many prefer credit unions to banks Attractive rates and friendly service are helping credit unions to grow
By Emma D. Sapong
NEWS STAFF REPORTER
With the poor economy forcing many of us to think a little harder about what’s in our wallets, the questions of where to put our cash and how to manage it seem more urgent these days. We all know what’s up at the banks that dot Western New York’s neighborhoods. But in recent years, credit unions have opened their membership ranks, and millions of people nationwide, and tens of thousands locally, have joined.
Historically, credit unions were formed by employees in the workplace, offering basic savings and checking accounts and some consumer loans. These organizations, owned by their depositor members, also began with the mission of assisting the underserved, allowing them to gain nonprofit status and excluding them from paying federal income taxes. This, of course, keeps consumer fees down, and allows them to pay more on deposits or charge less on loans.
“Every saver in the credit unions owns the credit union, and it doesn’t matter the amount they have in [a] credit union, everybody has an equal share,” said Patrick Keefe, vice president of communications for Credit Union National Association, which is based in Washington, D. C.
“They elect leadership from the members themselves,” Keefe continued. “Credit unions are democratically elected, volunteer-led, cooperatively owned and not-for-profit. That doesn’t mean that credit unions do not realize a net return after paying all their bills. The real difference is a bank exists to maximize profit for shareholders. Credit unions exist to maximize service for members.”
The downside, for a long time, was the lack of conveniences: No ATMs, few branches, etc. What’s changed recently is technology. Banking online with credit unions has made them more attractive to members, who also can utilize ATMs at some of these cooperative financial institutions. And many credit unions, especially the larger ones, have broadened their products and services.
“We are an alternative to banks; people have a choice,” said Patricia Edinger, manager of the Buffalo Metropolitan Federal Credit Union, a countywide organization that has 15,000 members.
Unlike pure non-profit organizations or charities, credit unions are expected to make a small profit or “surplus” to fund operating expenses and pay dividends (interest paid on deposits). Nationally, there are 8,088 credit unions with 90.7 million members.
Local credit unions include the Buffalo Postal Community Federal Credit Union, St. John’s Buffalo Federal Credit Union and Cornerstone Community Federal Credit Union, which is Western New York’s largest with more than $240 million in assets and 44,000 members. Cornerstone has several branches and its own ATMs, all in Niagara County.
Focus on customers
A combination of low-interest loans and personable customer service lured some area residents to become members of credit unions. They offer many of the same services as banks, such as a variety of loans, online banking, debit cards, savings and checking accounts. The National Credit Union Administration, a government agency and regulator, insures credit unions’ saving accounts just as the Federal Deposit Insurance Corp. does for banks.
“We are not profit-driven, we are people-driven,” Edinger said. “We’re different from banks. We are able to offer a better interest rate and dividend rates because we don’t have the expense of a paid board [of directors].”
The Kenmore Teachers Federal Credit Union is a traditionally chartered credit union, where membership doesn’t extend beyond employees of public and parochial schools in the district.
That mission is more emphasized, said branch manager Cheryl Scott. The credit union has more than 3,300 members and $22 million in assests. “It’s very much like a family; you can feel the difference because it’s smaller,” Scott said.
When Don Tolbert began working in City Hall, a co-worker suggested he join the Buffalo Metropolitan Federal Credit Union, since it was across the street. Tolbert already had an account with a local bank, but opened another one with the credit union so he could easily skip over there during his lunch break.
Twenty-five years later, he keeps his money exclusively with the credit union. Tolbert said he quickly discovered the credit union had more to offer than the convenience of being a few steps away. So he closed his bank account. “It’s been excellent,” he said of his experience at the South Elmwood Avenue Credit Union. “It’s a little more personal; we’re like a family. At the bank, it was sterile and I was like a number — one of thousands. But I feel like I’m very significant at the credit union.”
In addition to the customer service, Tolbert has gotten a few low-interest loans from the credit union over the years.
“They’ve helped me buy three vehicles and a home improvement loan for a new roof,” said Tolbert, a Buffalo resident, who works in the city’s Office of Strategic Planning. “And I got really good rates.”
Different from banks
Of course, banks are in competition with credit unions. John Hall, senior vice president for public relations of the American Bankers Association, said banks for years have taken issue with larger credit unions, accusing them of operating just like banks but being allowed to maintain their nonprofit status.
“They were chartered differently to serve people of modest means,” he said. “Our argument is some of them have outgrown the special treatment. They are getting an unfair advantage by not paying taxes and not being good corporate citizens.”
Hall said community banks are fierce competitors of credit unions, providing similar customer-friendly service and interest rates “that are comparable or better than those offered by credit unions.”
Credit unions can’t provide full-service needs that banks do, he said. For example, banks do more business lending, offer larger loans and are more accessible with more branches and ATMs. For those reasons, often time, credit union members also have accounts at banks.
“They realize the bank is much more convenient,” Hall said.
Gaining momentum
Many credit unions have improved their accessibility by offering online banking, joining a national network of ATMs, and allowing members to receive service at other area credit unions.
The Buffalo Metropolitan credit union has two ATMs — one at the office and one in City Hall. It also is part of the Allpoint ATM network, which allows members to use ATMs around the area and country. The Kenmore Teachers credit union does not have ATMs, but is also part of the Allpoint network.
Buffalo Metropolitan started in 1937 in City Hall for city employees, but later grew to include other employer groups, such as BlueCross BlueShield of Western New York and Kaleida Health. And in 2004, the credit union received a community charter, opening its membership to all residents of Erie County. The credit union has 15,000 members and $58 million in assests.
“We kept having people coming in who were not part of our employer groups but who wanted to join, and we wanted to open it up to other downtown employees,” Edinger said.
John Lombardo, a Buffalo resident, has been a member for seven years, and he’s been free of hidden fees and charges, he said.
And Lombardo has gotten low interest rates on the five or six loans, including a home equity and student loans, he’s taken out over the years, he said.
“I’ve been very satisfied,” Lombardo said. “The level of customer service is great. The treatment is like an old-fashioned bank.”
<b>esapong@buffnews.com</b>
