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Credit Unions Targeting Efforts at Capturing the Gen Y Market

Gen Y consumers, those in their 20s and 30s, are being courted by everyone, including credit unions, which say they’re making significant inroads to capturing a large portion of the market.

A recent report from CO-OP

Financial Services, which operates a network of 30,000 ATMs for credit unions, found that those institutions continue to have a leg up on other financial services providers when it comes to service quality, perceived value, trust, customer satisfaction and loyalty.

While the age group now makes up about 80 million — or 30 percent — of the nation’s population, they will account for 46 percent of the nation’s income by 2025, the report said.

“The competition among financial service providers to attract and keep these young consumers is fierce and getting more so as new services, products and technologies seem to change the market on a daily basis,” the report stated.

Although many younger folks enjoy using online and mobile services, they also like the ability to get personal information at a branch. The report cited another study by Accenture that found that 78 percent of some 2,000 consumers surveyed — of all ages — said they see themselves using branches as often if not more often in five years’ time.

At California Coast Credit Union, attracting Gen Y consumers is a huge focus, Marketing Director Rene McKee said.

Earlier this year, Cal Coast opened a new branch at San Diego State University’s Aztec Student Center, and last year it signed a 10-year partnership with the university on signage to the Open Air Theatre. In tandem with these agreements, the credit union is offering financial literacy classes on the campus, as well as colleges in the San Diego Community College District, McKee said.

“We’re also doing targeted advertising to Gen Y consumers on the radio and Pandora,” she said, referring to the online music streaming service.

The outreach is apparently working. Of the about 37,000 new members that Cal Coast has signed up in the past three years, 12,000 — or about a third — are from the Gen Y group, she said. Total membership at the $1.8 billion credit union is about 125,000.

• • •

Hakes to head Union’s SBA team: Kirsten Hakes was named managing director of Small Business Administration lending within Union Bank’s business banking unit. Hakes, most recently with OneWest Bank as senior vice president and SBA manager, has more than 30 years of experience in banking, having started with San Diego Trust & Savings Bank.

• • •

BOFI shares fall hard but are still up: Back in March, shares of BofI Holding Inc., the parent of BofI Federal Bank, were soaring past the $100 mark, topping out at $106 and change. As of July 7, the stock (Nasdaq: BOFI) was at $74 — having fallen and rebounded several times.

A recent report from the Motley Fool noted much of the increase was due to the Internet-based bank’s “off-the-charts” second-quarter results for its fiscal quarter ended Dec. 31, 2013. The bank booked net profits of $13.2 million, up nearly 35 percent from the like quarter in 2012.

The big increases in several measures attracted lots of new investors, causing the stock to gain about $30 over about a month. But a big problem with a bull run on a stock is that it usually weakens valuations, the Fool columnist

Eric Volkman said.

So just as the stock’s rise was quick, so was its fall — down to the low 70s as newbies dumped the stock for other investments.

Still, BofI is up 57.5 percent for the year, which isn’t too shabby.

Just about a year ago, BofI was trading at about $49.

• • •

SBA loan volume up in San Diego: San Diego ranked second on a list of California cities obtaining SBA loans so far in fiscal 2014, said CDC Small Business Finance, which specializes in SBA 504 loans.

Through May, or eight months into the fiscal year, local businesses got $40.6 million in SBA loans, second only to Los Angeles, which got $114 million.

In other CDC Small Business Finance news, the nonprofit entity that partners with banks on 504 loans said it has approved some $163 million in such loans to statewide hoteliers, or more than triple the amount advanced in fiscal 2013.

Kelly Ryan, CDC’s loan expert, said SBA financing enables hoteliers to obtain multiple SBA loans for multiple hotels with no limit on project size. That’s because of a new Green 504 loan program that allows higher lending limits for owners who are making energy upgrades to their properties.

The owners are required to prove the improvements will result in a 10 percent reduction in energy costs.

SBA 504 loans provide 85 percent fixed-rate financing for hotel acquisition and construction. The current interest rate for a 20-year 504 loan is 5.06 percent, Ryan said.

• • •

City National sells retirement unit: City National Bank, based in Beverly Hills and with seven offices here, announced that it’s agreed to sell its San Diego-based retirement record-keeping business to OneAmerica Financial

Partners Inc., an Indianapolis-based insurance corporation.

Neither party revealed the price of the purchase, which is expected to be completed later this year. City National has 67 employees in that unit.

• • •

Bank failures still happen: Although rare, bank failures haven’t disappeared entirely. In Oklahoma late last month, regulators seized tiny — only about $23 million in assets — Freedom State Bank. That brings the total failures for this year to 12, which is on pace to meet the total of 24 bank failures for 2013.

It’s a huge difference since 2010 when 157 banks bit the dust, including two in San Diego. That was the highest number of failures since the savings and loan crisis 20 years earlier.

• • •

Small Change: San Diego Private Bank moved its downtown San Diego office from Little Italy to 550 W. C St., at the corner of Columbia Street. The new office is larger, has more parking and provides an entrance within the building, CEO Maria Kunac said. … San Diego County Credit Union is a sponsor of the San Diego LGBT Pride celebration, which will be held July 18-20 in Hillcrest.

Send any news about locally-based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.

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