Thursday, October 2, 2008

Wachovia customers use their feet, head for CUs

SANTA ANA, Calif. (10/1/08)--Some Wachovia customers are heading to credit unions for their financial needs after the bank's deposits and other assets were sold to Citigroup Monday.

Branna Banks, a Wachovia customer from Santa Anna, Calif., decided to move her money from the national bank that sustained $1.7 billion in losses this year. She opened an account Friday at Bay FCU, Capitola, Calif. (Santa Cruz Sentinel Sept. 30).

In the past two weeks, the $654.2 million asset credit union has opened 1,270 new accounts totaling 14.7 million--a 40% increase, compared with a month when a promotion was not running, Tonee Picard, Bay FCU senior vice president and chief marketing officer, told News Now.

"The lobbies are really full and business is good," Picard said. "We've prepared a lot of user documentation and are answering questions about rates. Education is a key component for the community right now to get them through this. We've also conducted extensive one-on-one training with 230 employees about National Credit Union Administration insurance. We've equipped them with information and handouts."

The $72.2 million asset Santa Cruz (Calif.) Community CU also has seen numerous new members come through its doors in the past few weeks, with some saying they were moving their accounts from other failed financial institutions, Shelia Schat, spokeswoman for the credit union, told the newspaper.

The Wachovia takeover, along with several other recent bank takeovers, have left the country with three so-called superbanks: Citigroup, Bank of America and JPMorgan Chase.

One economist is not that concerned about higher costs and consumer prices caused by the "quasi-monopoly" of recent bank takeovers, including Citigroup's absorption of Wachovia, because there are more than 8,000 banks nationwide, he told the Associated Press (Orlando Sentinel Sept. 30).

Michael Pagano, finance professor at the Villanova University School of Business, also said credit unions are viable alternatives, from big ones "to small mom-and-pops with $10 million in assets."

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