MAC Virtual Seminar

1
MAC Virtual Seminar Current Trends in the
Financial Services Industry Janet
McDonald Division Manager, Marketing CUNA Mutual
Group
2

• Janet McDonald
• Division Manager, Marketing (MWMD)
• CUNA Mutual Group
• Sr. Vice Pres./CUSO Gen. Mgr _at_ Purdue
• Employees FCU from 8/1990 to 1/2001
• Responsible for Marketing, Business
• Development, Human Resources,
• Training
• Managed wholly-owned CUSO offering
• approx. 15 services to members
• Previously Executive Vice President of
• Houston Police Federal Credit Union

3
Housekeeping

• Mute - Use Mute button or 6
• Unmute - 7
• Please do not put us on Hold
• Go Full Screen
• Ask lots of questions
• Looking for lots of interaction

4
Todays Agenda

• The Credit Union Marketplace
• Demographics
• Lending
• Technology/E-Commerce
• Legislative
• What impact does this
• have on Marketing?

5
Our Evolving Industry
6
The Credit Union Marketplace
7
Total Assets at Credit Unions and Banking
Institutions
Billions
Source NCUA, FDIC
8
Distribution of U.S. Credit Unions, Year-End 2003
(by asset size)
Source CUNA Economics Statistics
9
Asset Growth at Credit Unions
Percent
7.6
5.7
Source CUNA Mutual Business Insight Forecast
10
Our Credit Union Marketplace
of CUs
Forecast
Source CUNA Mutual Business Insight Forecast
11
Annual Net Decline in Number of CUs
Number of CUs
February 2004 February 2005 Decline 387
Forecast
Annualized YTD
Source data CUNA Economics Statistics and CUNA
Mutual Business Insight Group
12
Net Gain in Total CU Membership
February 2005 86.5 Million
Millions of Members
Annualized February YTD
Forecast
Source data CUNA Economics Statistics and CUNA
Mutual Business Insight Group
13
Total CU Membership
February 2005 Actual 86.5 Million
Forecast
Millions of Members
Source data CUNA Economics Statistics and CUNA
Mutual Business Insight Group
14
CUs with Assets gt 100 Million
Market Shares - Percent
398
691
1,165
1,607
Source CUNA Mutual Business Insight Forecast
15
Federal Credit Union Community Conversions
thousands
Source NCUAs Summary of Delegated Actions
Yearly Totals
16
Federal Credit Union Community Expansions
thousands
Source NCUAs Summary of Delegated Actions
Yearly Totals
17
Customer Satisfaction(percentage very
satisfied with PFI)
Source American Banker/Gallup Consumer Surveys,
1984-2003
18
What Impact Does This Have on Marketing?
19
Demographics
20
Distribution of U.S. Population
(thousands)
Y o u t h
Gen Y
Gen X
Boomers
Working Mature
Seniors
Age
Source U.S. Census Bureau
21
Average Age of Adult Credit Union Members (1985
to 2004)
Source CUNA Research Services
22
U.S. Population by Ethnicity
2000
2050
Source U.S. Census Bureau
23
U.S. Hispanic/Latino Population 2000
Hispanic/Latino by state
24
Unbanked Households by Race/Ethnicity

• Those more likely to be unbanked
• Hispanics/Latinos
• African-Americans
• those under age 25
• unmarried individuals
• women
• HHs earning less than 25K/year

Source Federal Reserve Boards 2001 Survey of
Consumer Finances as published by the Filene
Research Institute
25
U.S. Population by Age, Race Origin 2003
Under 18
18-24
25-44
45-64
65
Median
36.4
39.5
31.3
29.0
33.0
26.8
Source U.S. Census Bureau
26
Extent to Which CU Members Reflect the
Racial/Ethnic Distribution of the U.S. Population
Sources U.S. Census Bureau 2003 estimates, and
CUNA Research Services, 2004
27
What Impact Does This Have on Marketing?
28
Lending
29
Loans are Best Investment
360 Bps
Source NCUA 5300
30
Loan Growth at Credit Unions
Percent
10.4
6.6
Source CUNA Mutual Business Insight Forecast
31
Lending Statistics Market Share

• How many of your Members look to you for their
  borrowing needs?
• Car Loans 3 out of 10
• Mortgage Loans 1 out of 10
• Home Equity 2 out of 10
• Personal Loan 3 out of 10
• Student Loan 1 out of 10
• Credit Card only 3 of all outstanding CC
  balances are in CUs

32
Housing Market Cools
Millions of Homes Sold
7.1
6.1
New
Existing
Source Global Insight, March 2005
33
Distribution of Homebuyers (by gender and
marital status)
Source The 2003 National Association of
Realtors Profile of Home Buyers and Sellers
34
Profile of Typical Homebuyers

• Repeat buyer
• Age 46
• 74,600 household income
• 23 down payment
• 189K home price

• First-time buyer
• Age 32
• 54,800 household income
• 6 down payment
• 136K home price

• Second-home buyer
• Age 47
• 85,900 household income
• 66 married couples
• 37 purchase as investment

Source The 2003 National Association of Realtors
Profile of Home Buyers Sellers
35
Renters Likely to Buy a Home Before 2007
Percentages equal those very likely plus
somewhat likely to buy a home.

Source 2003 Fannie Mae National Housing Survey
36
Projected Increase in Home Purchases (from 2001
to 2005)
Source Harvard Universitys Joint Center for
Housing Studies
37
Credit Unions Offering First Mortgages(by asset
size)
Overall 51
Source CUNAs Operating Ratios Spreads,
Year-End 2003
38
Credit Unions Offering Specialized Mortgage Loan
Programs
Base is credit unions with 50M or more in
assets. Source CUNA Mutual Groups 2003 Lending
Strategies Trends Research
39
Vehicle Sales Rise
Millions of Vehicles
17.4
16.8
Trucks
Autos
Source Global Insight, March 2005
40
Credit Unions that Use Indirect Lending (by asset
size)
Overall 14
Source CUNAs Operating Ratios Spreads,
Year-End 2003
41
Average Retail Selling Price of New Vehicles (by
year)
Source NADA Industry Analysis Division
42

• Vehicle Lending Growth Comparisons

Percent
Percent
February 2005
New 11.4
7.3
Used 4.1
Source data CUNA Economics Statistics and CUNA
Mutual Business Insight Group
43
Credit Unions that Use Risk-Based Lending (by
asset size)
Overall 47
Source CUNAs 2003 Credit Union Services Profile
44
Credit Unions That Offer Programs and Services
Geared to Low- and Moderate-Income Households
(by type of credit union)
Expansion CUs are those that were granted FOM
expansions into underserved areas. Source
CUNAs 2003 Serving Members of Modest Means
Survey Report
45
Member Small Business Ownership
Source CUNA Research Services, 2004
46
Number of Credit Unions that Offer Member
Business Loans
1,671
1,610
Source CUNA and NCUA
47
Commercial Loan Market ShareAt U.S. Depositories
Year-End 2003
Source NCUA, FDIC
48
Technology/ E-Commerce
49
U. S. Online Shoppers
of Internet Users
Millions of Online Shoppers
Base is all Internet users, ages 14
older. Source eMarketer, April 2003
50
Projected Use of Online Banking
US Households
Source TowerGroup
51
Online Banking and Financial Activities(by age
segment)
Source comScore Media Metrix, Audience Insite
Measures, Fall 2003
52
Very Important in Decision to Bank Online
I can do my banking when it is convenient for me
Banking online saves me time
Banking online gives me better control over my
finances
I can do my banking in private, without having to
talk to anybody
There is more banking infor- mation available to
me online
Banking online saves me money
There are more bank ser- vices available to me
online
Source Pew Internet American Life Project,
November 2002
53
Number of EBPP Households in the U.S. (1999-2005)
Source TowerGroup, January 2004
54
Impact of Phishing on Consumer Behavior
Base is online adult Americans with a bank
account. Source Cyotas Financial Institution
Email Fraud Survey, April 2004
55
Aside from withdrawals, which transaction shows
the most revenue potential popularity at the
ATM?
Source ATM marketplace.coms ATM Future Trends
Report 2004
56
How U.S. Consumers MadeIn-Store Payments
(1999-2003)
Source Dove Consulting, December 2003
57
Consumer Retail Payment Preferences (at POS)
Payment Choices in a Changing World, March
2004 Source PULSE EFT AssociationUnderstanding
Consumer
58
Eight Year History of Debit Transaction Volumes
Source The Savage Consulting Group and the CO-OP
Network
59
Credit Unions Offering Debit Cards(by asset size)
Among credit unions that offer share
draft/checking accounts
Source CUNAs 2003 Credit Union Services Profile
60
Growth of Retailer vs. Bank-Issued Gift Cards
(2003-2007)
Source TowerGroup, January 2004
61
Credit Union Plans to Offer Identity Theft
Insurance/Monitoring Program
Source CUNAs Credit Union Panel Survey, July
2004
62
What Impact Does This Have on Marketing?
63
Legislative
64
Highlights

• The ABA is trying to rally grassroots support
  among bankers for taxing credit unions.
• Bankers will continue attempts to exploit state
  budget deficits to puish legislation imposing new
  taxes on credit unions.

65
State Bank Attack Monitor
http//www.cuna.org/member/bank_attacks.html Sourc
e Credit Union National Association and Leagues
66
The Gloves are Off!

ABAs Campaign
CUNA and the Leagues Campaign
Source American Bankers Association and Credit
Union National Association Web sites
67
Willingness to Mobilize in Support of Legislation
That Significantly Benefits CUs
Source CUNAs 2004 Political Affairs Research
68
Member Likelihood of Writing Their Congressman if
Asked by Credit Union
Base is registered voters. Source CUNAs 2004
Political Affairs Research
69
What Impact Does This Have on Marketing?
70
Thank You! Janet McDonald (765)
659-9540 janet.mcdonald_at_cunamutual.com