Pasadena Magazine

February 2016 - Beauty, Love and Money

Pasadena Magazine is the bi-monthly magazine of Pasadena and its surrounding areas – the diverse, historically rich and culturally vibrant region that includes Glendale, the Eastside of Los Angeles and the San Gabriel Valley all the way to Claremont.

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Community Banking Despite protestations to the contrary, the nation's biggest banks have only gotten bigger. Now equally convenient, and a lot more personal, credit unions increasingly provide the type of customer centric banking experience the bigs no longer do. STORY BY // TONY BIASOTTI ∫ IF YOU'RE LIKE MOST AMERICANS, YOU PROBABLY HAVE VERY LITTLE IDEA WHO OWNS YOUR BANK. SHAREHOLDERS, OF COURSE, BUT THAT JUST MEANS A FACELESS BAND OF THOUSANDS OF PENSIONS, MUTUAL FUNDS AND OTHER INVESTORS. YOU MIGHT HAVE A SLIGHTLY BETTER IDEA OF WHO RUNS YOUR BANK, BUT THAT EXECUTIVE IS NEARLY AS MYSTERIOUS AS THE SHAREHOLDERS, A CEO WHO POPS UP FROM TIME TO TIME ON CABLE NEWS IN A $5,000 SUIT. But there are also millions of Americans who know their bankers quite well. These people can walk into their bank, and, without much trouble, get a sit-down meeting with the CEO. And they're on quite good terms with their bank owners, because they themselves own the bank. They're credit union members. A credit union is a fi nancial institution that works, in most ways, just like a bank. Like a bank, it holds deposits and makes loans. It's regulated somewhat differently than a traditional bank, but the rules are very similar, and they include federal insurance of deposits up to $250,000. The biggest difference between a bank and a credit union is the ownership structure: a credit union is a not-for-profi t organization that is owned collectively by its members. It's governed by a volunteer board of directors, elected from among the membership, and run on a day-to-day basis by executives who work for the board. The collective, not-for-profi t ownership is what gives credit unions their big advantage in the marketplace. The money that a bank would take as a profi t for its shareholders can be used at a credit union to keep banking fees down, interest rates lower for loans and returns higher for depositors. The result is that credit unions typically come out slightly ahead of banks when a customer is looking for the best rates on a loan. It's also easier to fi nd a free checking account at a credit union than it is at most banks. Bank of America, for example, had a profi t of $4.8 billion in 2014. Were there ever a credit union that big, with that much money on its hands—and there isn't, and probably never will be—it could take that $4.8 billion and return it to members in the form of, say, higher returns on savings accounts, or lower interest rates on mortgages and car loans. "We look at rate surveys to make sure we're staying below what the banks charge," says Deena Otto, senior vice president for administration and marketing at Wescom Credit Union. "If you put us up against the banks, you can be looking at a quarter or half percent difference." Wescom is based in Pasadena and is one of the largest credit unions in California, with 22 branches and around $3 billion in assets. Only about 4 percent of credit unions nationwide have more than $1 billion in assets, according to the Credit Union National Association. The biggest difference between a bank and a credit union is the ownership structure: a credit union is a not-for- profi t organization that is owned collectively by its members. It's governed by a volunteer board of directors, elected from among the membership, and run on a day-to-day basis by executives who work for the board. FEBRUARY 2016 65 T R E N D S I N C O M M E R C E A N D C A S H DOLLARS & SENSE dollars_Feb16.indd 65 1/20/16 2:47 PM

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