GIVING THEM THEIR DUE : CREDIT UNIONS CONTINUE TO WOO CUSTOMERS WITH PERSONAL SERVICE, LOW RATES. BANKS TRY TO PUT LIMITS ON TAX EXEMPTIONS FOR RIVALS.Byline: Deborah Adamson Daily News Staff Writer Reared as a banker's daughter, Deborah McMurray is an avid fan of credit unions. The Burbank city worker has been patronizing them for the last 20 years, and recently switched her remaining bank checking account to Burbank City Employees Federal Credit Union because she got tired of paying $9 in monthly fees. Her credit union does not levy a maintenance fee on her account. ``Banks are charging more in service fees,'' she said. ``The banks (also) have gotten too large and too impersonal. I like to be able to pick up the phone and say, `This is Deborah McMurray. Can you do this for me?' '' Credit unions, she believes, ``are much more like a family.'' In an era of bank megamergers and intense competition for customers, credit unions have built market share by offering lower loan rates, imposing fewer fees and paying more on deposits. It's not uncommon to find accounts with no or low minimum balances of $5. New car loans average 7.76 percent, compared with 9.37 at banks and thrifts. And they may be the only institutions left that will lend you $100. ``Traditionally credit unions have been a better deal,'' said Ronald Keeler Keel´er n. 1. One employed in managing a Newcastle keel; - called also keelman ltname>. 2. A small or shallow tub; esp., one used for holding materials for calking ships, or one used for washing dishes, etc. , president and chief executive of Lockheed Federal Credit Union in Burbank. As nonprofit cooperatives, they have the competitive advantage of being exempt from income taxes. The institutions give back a portion of their earnings to members after setting aside funds for losses and capital investments. Dividends to members come in the form of lower interest rates on consumer loans, higher yields on deposits and other perks perk 1 v. perked, perk·ing, perks v.intr. 1. To stick up or jut out: dogs' ears that perk. 2. To carry oneself in a lively and jaunty manner. that undercut undercut, n 1. the portion of a tooth that lies between its height of contour and the gingivae, only if that portion is of less circumference than the height of contour. 2. bank products. In recent years, credit unions have begun to band together to offer more services and branches. To combat the thousands of bank-owned money machines, credit unions have established an ATM network free to customers called ``The Coop.'' They are charging ahead in the on-line arena as well. The Burbank City Employees branch is planning to set up a home banking system by the end of 1997. ``It is crucial that we keep up with technology,'' said Tom Moioffer, president and chief executive of the cooperative. ``We won't disappear overnight if we don't, but we will lose the younger generation as time goes on.'' Increasingly, credit unions are sharing branches to cut costs and offer more outlets to customers. For instance, the Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. Police Federal Credit Union in Van Nuys lets other credit unions share its South Central Los Angeles office. In turn, the 32,000-member cooperative shares the branches of other credit unions. Some institutions even permit members from multiple groups. Lockheed includes 500 different groups as members, including employees of carmaker Saturn in Spring Hill, Tenn. ``When aerospace was booming, so was the credit union,'' said Tammy Tagami-Reeves, vice president of marketing and technology at Lockheed. The decline in aerospace jobs hit ``very hard. We did feel the effects of that.'' In 1984, the credit union's board of directors decided to diversify so it wouldn't be so vulnerable to the ups and downs ups and downs pl.n. Alternating periods of good and bad fortune or spirits. ups and downs Noun, pl alternating periods of good and bad luck or high and low spirits of the industry, she said. Today, Lockheed is the seventh-largest credit union in the state, with 111,000 members and $1 billion in assets. All this has bankers upset. ``It's not that we have an objection to competing with credit unions,'' said Virginia Stafford, spokeswoman for the American Bankers Association The American Bankers Association (ABA) is comprised of banks and other financial institutions. It seeks to promote the strength and profitability of the banking industry by Lobbying federal and state governments, building industry consensus on key issues, and providing products and in Washington. ``The concern is that credit unions want to compete directly with banks but they have tax advantages that we are not allowed. We ask for a level playing field See net neutrality. and equal rules,'' she said. ``If they act and look like a bank, they should be treated like a bank. And let the best man win.'' Banks contend that the ongoing wave of consolidations and diversifications violates the federal credit union act In 1934, the U.S. Congress passed the Federal Credit Union Act, which President Roosevelt signed into law. The purpose of the federal law was to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions. , which allows groups with common bonds to form cooperatives. But there's no common interest among members of credit unions that come from different companies, said Stafford, citing a cooperative that counted among its members the San Francisco Giants The San Francisco Giants are a Major League Baseball team based in San Francisco, California that currently play in the National League West Division. New York Giants history Early days and the John McGraw era , a funeral home and a sausage maker. In July, an appellate court A court having jurisdiction to review decisions of a trial-level or other lower court. An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed. in Washington, D.C., agreed with the banks. The court ruled that the AT&T Family Credit Union, with its 112,000 members from 150 different groups, violated the ``common bond'' provision of the 1934 federal act. Credit unions are appealing the decision. Meantime, a similar case is pending in Cincinnati. There could be several repercussions repercussions npl → répercussions fpl repercussions npl → Auswirkungen pl to the AT&T case, the national trade group said. Credit unions could be barred from diversifying - limiting their growth and making them more vulnerable to layoffs - while others might be forced to eject affiliates, thereby eroding their financial base. ``It is a big concern to credit unions at all levels,'' said Charles Bruen, president of First Entertainment Federal Credit Union in Burbank, which serves multiple companies in the entertainment industry. ``Credit unions are organizing on a national scale . . . they are being threatened in a big way by banks.'' Credit unions have vowed to take their case to the Supreme Court, if necessary. If that fails, they will seek legislative help in reshaping the credit union act. It's a fight for survival in the face of a formidable foe. ``Banks do see credit unions as limiting their ability to make money,'' said Chip Filson, president of Callahan & Associates in Washington, a consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a that tracks the industry. ``(Credit unions) can't be bought or sold because they are cooperatives. (Banks) have to destroy them because they can't buy them.'' LOCAL CREDIT UNIONS Here are the 10 largest credit unions in Los Angeles and Orange counties: Headquarters Assets Members 1. Hughes Aircraft Hughes Aircraft Company was a major aerospace and defense company founded by Howard Hughes. The group was based near Ballona Creek, in Culver City, California, USA, on the Pacific Coast. Hughes Aircraft was acquired by General Motors in 1985. Employees Manhattan Beach Manhattan Beach, city (1990 pop. 32,063), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1912. It is a residential and beach community with an oil refinery and nearby factories that produce transportation and electrical equipment, computers, and pottery. $1.62 billion 161,700 2. Orange County Teachers, Santa Ana Santa Ana, city, El Salvador Santa Ana (sän'tä ä`nä), city (1993 pop. 129,873), W El Salvador. It is the second largest city in the country and the commercial and processing center for a sugarcane, coffee, and cattle region. $1.6 billion 139,000 3. Westcom, Pasadena $988 million 106,400 4. Lockheed, Burbank $975 million 111,000 5. The California Credit Union, Los Angeles $519 million 82,500 6. McDonnell Douglas McDonnell Douglas was a major American aerospace manufacturer and defense contractor, producing a number of famous commercial and military aircraft. It merged with Boeing in 1997 to form The Boeing Company. West, Huntington Beach Huntington Beach, city (1990 pop. 181,519), Orange co., S Calif., on the Pacific coast, across from Santa Catalina Island, in an oil-producing area; inc. 1909. It manufactures aerospace vehicles, aircraft parts, optical instruments, and heat transfer equipment. $429 million 65,000 7. Long Beach Schools, Westminster $394 million 66,400 8. Premier America, Chatsworth $375 million 56,000 9. Rockwell, Downey $363 million 52,100 10. Xerox, El Segundo El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and $341 million 67,650 SOURCE: Credit Union National Association, Daily News Research HOW LARGE ARE THEY? (as of Dec. 31, 1995) Credit Unions Banks Thrifts No. of institutions 11,886 10,537 1,437 Total assets $312 billion $4.57 trillion $771 billion Earnings $3.4 billion $51.2 billion $5.3 billion SOURCE: Bauer Financial Reports Inc. AVERAGE INTEREST RATES CREDIT UNION VS. BANK AND THRIFTS Account/service Credit union Bank, thrifts Money market 3.69% 2.68% Interest checking 2.16% 1.40% 6-month CD 5.25% 4.79% 1 year CD 5.59% 5.13% 2.5-year CD 5.84% 5.40% 5-year CD 6.19% 5.73% Mortgages, 15-year fixed 7.70% 7.61% Mortgages, 30-year fixed 8.20% 8.08% 1-year adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. mort. 5.93% 5.84% Home equity line of credit 8.67%8.42% New car loan 7.76% 9.37% Unsecured personal loan 13.85% 15.51% Credit card 13.11% 17.18% SOURCE: Bank Rate Monitor CAPTION(S): Photo, 3 Boxes Photo: (Color) Ronald Keeler of Lockheed Federal C redit Union says credit unions often offer better deals than banks. David Sprague/Daily News Box: (1) LOCAL CREDIT UNIONS (See Text) (2) HOW LARGE ARE THEY? (See Text) (3) AVERAGE INTEREST RATES CREDIT UNION VS. BANK & THRIFTS (See Text) |
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