News Summary

SPRINGFIELD, Ohio — Even after nearly 100 years in business in the U.S., credit unions are still often a mystery. Those in the industry say they are regularly questioned about who can join and what types of services and products are offered.

"We are always trying to educate people about what credit unions are and who can belong," said Jim Kitchen, president and CEO of International Harvester Credit Union, in business since 1934.

The main office is located at 5000 Urbana Road.; IH recently opened a branch at 731 Scioto St. in Urbana to serve its 1,500 Champaign County members.

In the past, most credit unions were available only to company or government employees, but times have changed.

The majority credit unions in Clark and Champaign counties operate under a Community Charter, which allows anyone who lives, works, worships or goes to school in those counties to belong.

While credit unions offer similar services to traditional banks, they are nonprofit cooperative financial institutions owned by their members and run by a volunteer board of directors.

Traditional banks are for-profit. Shareholders own banks and expect positive financial performance from bank management.

Since credit unions are nonprofit, they exist to serve their membership, according to the Ohio Credit Union League, which reports more than 2.7 million Ohioans belong to credit unions.

"Typically, because of our structure, we can offer lower rates on loans and higher rates on savings accounts and CDs," Kitchen said.

Insuring accounts

Credit unions have access to federally backed and private insurance coverages for members, but are not insured by the Federal Deposit Insurance Corporation.

Member deposits are safe at credit unions, said Kathryn Allen, manager and CEO of Athena Credit Union, 1427 W. First St.

Members can have multiple accounts at Athena and each is insured to $250,000 by American Share Insurance, the nation's largest nonfederal insurer of credit union deposits, she added.

Athena, formerly The Education Credit Union, has been in business since 1941.

IH relies on the National Credit Union Share Insurance Fund, a government backed insurance fund for credit union deposits similar to FDIC insurance for banks.

Managed by the National Credit Union Association, NCUSIF coverage has levels similar to FDIC insurance and has been modified recently to cover members at higher levels. Until Dec. 2009, qualifying accounts are insured for $250,000 each.

No subprime mortgages loans

Loan delinquencies are low and foreclosures are nonexistent at most credit unions.

In Ohio as of Oct. 31, only 1.5 percent of consumer loans were more than 60 days delinquent according to the Credit Union National Association.

"Credit unions are in a little better position (with mortgages) because we did not take part in the subprime mortgage market," said Patrick Harris, director of media relations with the Ohio Credit Union League.

IH has no exposure to subprime mortgages and has no foreclosed homes on its books.

"We've just been conservative. We don't make loans over 80 percent and we make loans only to our members," Kitchen said.

Allen said Athena, too, has no foreclosures currently on its books.

Borrowers are beginning to rely more on credit unions for mortgages, Harris said, and as of June 2008, there was a 53 percent increase in mortgage loan origination statewide when compared with a year ago, he said.

Many credit unions, including IH and Athena, are offering a loan product similar to that offered by payday lenders.

Members can take out short-term loans for around 18 percent interest with some annual fees. Repayment schedules vary, but many are 30 days for a $250 loan; a loan must be paid in full before any other loans can be taken out.

One-on-one counseling

Financial education for members of all ages is offered at most credit unions.

There is usually one-on-one counseling or assistance available to help members learn to save or repair a credit report, Harris said.

As part of a national program, Athena works in conjunction with Junior Achievement to teach financial literacy to high school students. The credit union gives piggy banks to children starting in the first grade and works with parents to establish good saving habits.

"We know if we can make a difference at an early age," Allen said, "it will impact them for life."

Contact this reporter at (937) 328-0371 or elroberts@coxohio.com.