Knowledge Center Payday Loans

Slide 1: Payday Loan Considerations for Credit Unions Lois I. Kitsch National Program Manager REAL Solutions™

Slide 2: Strategy for Financial Success CREDIT UNION LOW WEALTH FAMILIES TRANSACTION HOME EDUCATION SAVINGS CREDIT SERVICES OWNERSHIP PRODUCT CHECK CASHING PAYDAY ALTERNATIVE LOW MEMBERSHIP FEE HLPR LOAN AWARENESS FEE FREE CHECKING SMALL LOANS SAVINGS AWARENESS COUNSELING MONEY ORDERS USED CAR LOANS SAFE ACCOUNTS STAFF TRAINING COUNSELING REMITTANCES LOAN POLICIES LONG TERM SAVINGS CREDIT SCORE STAFF TRAINING TAX PREPARATION STAFF AWARENESS

Slide 3: Who are these REAL People? 75% with income under $50 thousand Women – 62% with children at home Young – average age under 42 Educated – most have some college Employed – 100% Banked – 100% Our members – estimated 20%

Slide 4: R.E.A.L. People Use AFS Service Providers  Check Cashers  Pawnbrokers Call Centers  Online Payday Lenders  Banks (very limited)  Credit Unions (more than banks)

Slide 5: A Credit Union Opportunity... Really?

Slide 6: Do Our Members Use Payday Lenders YES!!! 100% of Wisconsin Credit Unions 100% of Ohio Credit Unions 100% of Kansas Credit Unions 91% of Maryland Credit Unions Of the 60 REAL Solutions Credit Unions Surveyed

Slide 7: Do Our Employees Use Payday Lenders YES!!! 50% of Wisconsin Credit Unions 67% of Ohio Credit Unions 75% of Maryland Credit Unions Of the 48 REAL Solutions Credit Unions Surveyed

Slide 8: Things to Think about… Target Market Members/Nonmembers Product components Education Savings component Terms/conditions Delivery systems

Slide 9: Marketing Selling the product Volunteers Staff Members Potential members Community

Slide 10: Telling the Story Tracking Results Members using Dollars saved Program stats Telling the story Media Law makers Community

Slide 11: Success Stories PG County Credit Union Pot of Gold Savings Member savings for a specific purpose 3 or 5 years to accumulate $2,500; $5,000 or $10,000 Current balance is 4.4% ($4 million) of credit union assets 1,000 members (of 12,000 members ) are using the program The member can borrow from the fund for 3% over the savings current rate

Slide 12: Sample Success Ohio credit unions Stretch Pay 42 Participating Credit Unions 2007 Results 8,900 Members 62,000 Advances $2,480,000 loans disbursed 3 Million Dollars Member Savings

Slide 13: GoodMoney Scorecard Active GoodMoney members: Estimated savings over 630 traditional payday lenders: $455,839 Closed GoodMoney members: 535 Referrals to FISC in 2005: 192 Total GoodMoney members: Referrals to FISC in 2006: 681 1,165 Referrals to FISC in 2007: 612 Total number of loans: 8,272 Total referrals to FISC: 1,485 Total dollar value of loans: $3,018,800 Members currently in credit counseling: 27 Average loan amount: $364.94 Source: Prospera Credit Union

Slide 14: Pennsylvania Credit Unions Started in October 2006 50 Credit Unions making loans 12-07 65 credit unions currently 5,884 loans disbursed $2,831,253 total disbursed At least 350 users new members Estimated Savings to Members - $2 Million

Slide 15: Freedom Suite of Products St Louis Community Credit Union 2nd change checking, Money Max Card and pdl alternative (product numbers for first six months of implementation) 774 members using product 1,114 advances done 275,000 current portfolio Average loan size $336 Loans disbursed $374,424 Default rate 1.2% 27% interest with $25 annual fee 10% required savings 90 day terms Rollovers allowed – no additional fee Estimated Savings to Members +$500,000

Slide 16: To Learn More Visit the NCUF Knowledge Center Contact your League Liaison or your Field Coach Contact NCUF – Jeff Purvis/Lois Kitsch 800 356 9655