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Post Dated Check $300 Maximum Loan Maximum Fee $15 per $100 Borrowed Term Generally 2-3 Weeks

Payday Lending in North Carolina. Post Dated Check $300 Maximum Loan Maximum Fee $15 per $100 Borrowed Term Generally 2-3 Weeks. Consumer Check Amount $300 Less Fee $45 Proceeds to Consumer $255 Interest Rate 300% to 600% APR (Depending on Term of Loan). Typical Payday Transaction.

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Post Dated Check $300 Maximum Loan Maximum Fee $15 per $100 Borrowed Term Generally 2-3 Weeks

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  1. Payday Lending in North Carolina • Post Dated Check • $300 Maximum Loan • Maximum Fee $15 per $100 Borrowed • Term Generally 2-3 Weeks

  2. Consumer Check Amount $300 • Less Fee $45 • Proceeds to Consumer $255 • Interest Rate 300% to 600% APR (Depending on Term of Loan) Typical Payday Transaction

  3. Payday Lending in North Carolina

  4. SECU Salary Advance Program • Maximum Amount $500 • Maximum Term 31 Days • Requires SECU Checking Account • Requires Direct Deposit at SECU • Underwriting Criteria: Breathing, Not Under Bankruptcy • Interest Rate 12.00%

  5. SECU Salary Advance Program • Just another form of a line of credit! (HELOC, credit card, retail line) • Automated advances, repayment • No new data processing systems! • No new legal opinions or disclosures!! • No new training of consumer lenders! • No new collection requirements … The most “profitable” loan we make!!

  6. SECU Salary Advance Program *Based on 15 day term

  7. SECU Salary Advance Program Basic Economics… *Current SECU Overall Return on Assets (ROA) Target is 1.00% …a rate of 18% would be entirely conscionable!

  8. SECU Salary Advance Program What if? *Current SECU Overall Return on Assets (ROA) Target is 1.00% …a rate of 18% would be entirely conscionable!

  9. SECU Salary Advance Program Under Talent Bill… … What other legitimate consumer product returns 26.00%?

  10. SECU Salary Advance Program Here’s our actual… November 2006 The true loss ratio is only ¼ of 1% on this product.

  11. SECU Salary Advance Program Savings Enhancement March 1, 2003 • Supplemental Savings Account • 5% of Proceeds to Savings (Example $100 Loan, $5 Shares) • Pledged Against Loan; SECU becomes a secured lender! • If Withdrawn, No Salary Advance Loan for 6 Months • Break the Cycle; currently $10+ million in balances!

  12. Let’s calculate that difference… • Payday Lender • $15 per hundred borrowed or $75 fee on a $500 loan for 1 month. • SECU • 1% of amount borrowed or $5 in interest on a $500 loan for 1 month. • 40,000SECU members use the salary advance loan each and every month. • Each member “saves” $70 each month (theirs $75 – ours $5!). • Monthly savings: $70 x 40,000 people = $2.8 million. • Yearly savings:$2.8 million x 12 months =$33.6 million. … Wealth creation at its best!!!!

  13. … Up to half the people who take out sub-prime loans could qualify for a prime loan which charges as much as 4% less interest … (“Fannie Mae”, Economist 8/31/2002) … One More Thing …

  14. The Social Problem The social cost of a 4% “mispricing”… Loan Amount: $100,000 … Give someone back 15 years of their life!!

  15. Other Opportunities • 100% Basic Transportation Loans (to $15,000); Hertz/Enterprise. • First Time Homebuyers Mortgage (102% Financing) low closing costs; interest on escrow; no PMI; in-branch refinances. • BALANCE Financial Counseling (No Cost); CCCS San Francisco. • Check Cashing?? (Check Cashers Charging 1-3%!) • Financial Planning – Members Trust/XCU Capital Financial Assessment Program; “Not Yet Wealthy”; “Special Needs”.

  16. Credit Unions are not a four letter word… … and banks are vital to the success of our communities!

  17. So, Go ahead, do the right thing! Questions.

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