The document discusses payday loans and alternatives to them. It provides statistics on payday loan customers and usage, such as over 250,000 Virginians receiving multiple payday loans in 2003. It then discusses the development of a payday loan alternative by Langley Federal Credit Union, including criteria, branding, and product success in processing over 16,000 loans totaling over $9 million while saving members over $1.2 million in fees.

1. Brett T. Noll Senior Vice President / CMO

2. Customer uses post dated check as collateral Employment is verified Subprime credit bureaus contacted Loan usually for 15 to 30 days Fees up to 15% in VA Very convenient Very costly What is a payday loan?

3. Payday Loan Locations Payday Lending Stores Check Cashing Outlets Pawn Shops Call Centers Internet

4. Payday Users 2/3 under 45 years old 62% female with children under 18 living at home Employed (50% in job less than 3 years, 23% in current job over 5 years)

5. Payday Loan Customer Profile Single parent families with low income Young adults Minorities/immigrants People lacking money management skills Anybody!

6. Astounding Statistics 22,000 payday lenders nationwide Estimated $6 to $8 billion dollars in fees last year Estimated 17% of military use payday loans (225,000 personnel)

7. Astounding Statistics In 2003, more than 250,000 Virginia consumers received more than one payday loan.* In 2003, 124 payday lending stores opened in Hampton Roads.** 40 Virginia Beach 36 Norfolk 26 Newport News 20 Hampton The VA Bureau of Financial Institutions reports that 1/3 of the total statewide payday lenders reside in the Hampton Roads area.*** Sources: *Better Business Bureau Serving Western Virginia Consumer Alert: Virginia Data Proves Payday Loans Equal Costly Cash. June, 2004. **Flagship News. It’s Hard To Break Free From Payday Lending Trap. http://www.flagshipnews.com. June 19, 2003 ***The Virginia Pilot. Payday Lenders Expect Booming Business Here Military Presence, Tight Incomes And A New State Law Help Draw Short-term Loan Firms to Hampton Roads. October, 2002.

8. Why are Payday Lenders popular? Better hours Better locations Provide what people need, fast No hassle Sometimes better than bouncing checks??? Sometimes better than late payments??? No alternatives???

9. Developing A Solution – A Six-Step Process Identify The Need Benchmark Shop The Competition Develop Differentiated Product Brand The Product Get The Word Out (July, 2004)

10. Payday Lending Comparison 18% - $1.73 $500, 7 day term N/A LFCU QuickCash 780% - $75 $500, 7 day term $15 per $100 PAYDAY LENDER APR 7 DAYS Term Fee Lender

11. Approval Criteria Borrower must have been an LFCU member for at least 180 days at time of application Borrower must have had direct deposit of their payroll Or, has had a QuickCash loan with LFCU in the past and repaid as agreed

12. Branding Your Product Naming Your Baby Playing Tag With Taglines The Color of Money

14. Newspaper Advertisement

15. Mass Transit Advertising Full Bus Wrap Large Bus Poster

16. Additional Advertisement Teller Handout Air Force Base Educational Handout Press Release

17. Weekly Loan Activity

18. Factors In Building Your Payday Loan Alternative Model Annual Fee Pricing Direct Deposit Requirement Forced savings System Notification for Repeat Borrowers Financial Counseling Staff Training Go back to what people like in payday lenders - does your program fit the bill?

19. Setting up products to complement your alternative Starter Platinum Line of Credit Share Secured Loans Financial Counseling CreditBuilder Langley Saves

20. LFCU Product Success Guess how many loans per month we average today

21. Product Success To date LFCU has processed almost 16,000 loans & disbursed over 9 million dollars

22. Product Success Since July, 2004, we’ve saved our members over $1.2 million in fees they would have otherwise incurred had they borrowed at Payday Lenders

23. Proposed legislative ideas in Virginia Capping interest rates Limiting the number of payday loans a person can have to 3 Allowing a day to pass before a consumer can take out another payday loan after paying off the first

24. The Payday Lending Industry fights state legislation.

27. What happens when you call an internet lender?

28. Thanks largely to payday lenders, the 2007 John Warner Department of Defense Authorization Act contains language that could ultimately have an adverse affect on any financial institution serving the military.

29. Defense Authorization Act: Identifying active duty military and immediate family (includes Reserves and National Guard) A 36% rate cap on loans inclusive of optional fees, charges for services, and late charges 2 separate APRs?? Excludes refinancing Requirement of oral disclosures Prevents Car Title Loans As worded, could prevent payroll deduction as means of payment Severe sanctions of imprisonment for rule violation

30. You might have a Payday Lending problem if… Your member’s average APR is higher than Derek Jeter’s batting average There are more payday lenders popping up in your community than Starbucks Results of your annual member survey show that Cash Advance America is your members’ Primary Financial Institution Payday lenders ask to lease space in your buildings You start seeing Board members’ cars in payday lender parking lots!!!

31. Thank You