As Citigroup Inc. joins other financial institutions that are lining up for part of $700 billion in relief money under a Treasury program designed to ease the subprime mortgage-driven credit crunch, Maryland credit unions, lately ineligible for the program, have started a regional ad campaign touting their solvency and credit-willingness.
“There is no credit crunch at credit unions,” said Sarah Turner, director of public affairs for the 170-member Maryland and the District of Columbia Credit Union Association in Columbia.
To help make this marketing point for member-owned credit unions in a year when 22 for-profit banks worth $371 billion have failed, MDDCCUA made 632 ad and traffic sponsorship buys on Maryland and Washington, D.C., radio stations plugging Congress’ temporary increase of deposit insurance to $250,000. Sixty-five bus-tail ads stating, “Credit Unions: Where Your Savings Are Safe” and citing a reference Web site also appeared regionally.
“We wanted to make sure that consumers know that they have a place to go that’s safe and sound, and that credit unions are insured to the same level as [Federal Deposit Insurance Corp.]-insured banks,” Turner said of the $130,000 campaign that ended Nov. 23, noting that the Web site’s traffic has doubled.
“I would estimate our membership is up 5 percent year-to-date,” Brain Vittek, chief executive officer of 7,000-member Destinations Credit Union in Baltimore, said of the credit crisis’ upshot for his institution. “We’ve also noticed an increase in deposits.”
Vittek said Destinations is not experiencing any significant cutback in lending.
But Alison Tavik, communications director for the Maryland Bankers Association, said lending also is largely unimpaired at her 100 member banks.
“There has been a tightening of underwriting standards,” she said, noting that, like credit unions, most Maryland banks did not engage in subprime lending, “but that’s exactly what customers at FDIC-insured banks expect.”
Tavik provided information showing that as of June 30, 2008, net charge-offs at Maryland’s 131 commercial banks was 0.28 percent, compared with a national rate of 1.16 percent.
MDDCCUA’s ad campaign takes place as the nation’s 8,000 federally insured credit unions are posting a 15 percent increase in mortgage and business lending year-over-year, but have become ineligible for the Troubled Asset Relief Program.
