A local credit union has developed a provocative marketing campaign aimed at luring away depositors and other customers from banks.
North-Haven based Connex Credit Union, which has an office in East Hartford and seven others around the state, has been running an "Unbank" campaign, which encourages people to go online and write about what frustrates them about banks.
The message board, located online at www.UnbankNow.org, has compiled more than 40 posts, many of which take shots at banks for issues ranging from subprime lending to overdraft fees and other charges.
For example, one anonymous message board submitter writes, "A bank's concern is to make money for the shareholders, plain and simple. They do that by charging high interest rates to the borrowers, paying low interest rates to the depositors, and charging every possible fee they can invent to all of them."
Tansley Stearns, vice president of sales and service at Connex, said the campaign isn't meant to be an attack on banks, but instead to get the word out that credit unions are a viable option during these tough times. The credit union is also trying to take advantage of the negative headlines that larger, national banks have recently received to try to increase their own market share.
"We do see ourselves as being different from banks, but not a lot of people know the differences," Stearns said. "We thought this campaign would make us stand out from our competitors."
The campaign is aimed at clearing up the public's misconceptions about credit unions and to underscore the advantages of joining them. Spelling out the differences between the two is a crucial part of the campaign, Stearns said.
For example, Stearns said most banks are for-profit business corporations owned by private investors and governed by a board of directors chosen by the stockholders. Savings banks can either operate as a corporation owned by shareholders, or as a mutual entity owned by depositors.
Credit unions, on the other hand, operate as non-profit financial cooperatives owned by their members who usually share a common bond, such as belonging to the same organization or living in the same geographical area, Stearns said.
Both banks and credit unions tend to offer similar services, including checking and savings accounts and consumer loans, but banks tend to emphasize business and consumer accounts, while credit unions emphasize consumer deposit and loan services.
Depositors at banks, savings institutions and credit unions are insured up to $250,000 per account. Banks are covered by the Federal Deposit Insurance Corp., while credit unions are insured by the National Credit Union Administration.
Banks based in Connecticut have withstood the financial crisis better than banks in many other states. Despite losses related to sour investments in Fannie Mae and Freddie Mac, Connecticut banks mostly avoided the pitfalls of subprime lending and continue to lend money to the community.
Net income at Connecticut's 58 federally insured financial institutions dropped 44 percent, to $217 million during the first nine months of 2008 from $387 million a year earlier, according to the Federal Deposit Insurance Corp.
Net income for the state's 143-federally insured credit unions fell 19 percent to $26.6 million through the first three quarters of 2008, compared $32.9 million during the same period last year.
Since the middle of 2008, there have been no bank failures in the state, while three small Connecticut credit unions have failed.
NewAlliance Bancshares Inc. the holding company for New Haven-based NewAlliance Bank, has been added to the Standard and Poors MidCap 400 Index.
Introduced in 1991, the S&P MidCap 400 is the most widely used index for mid-sized companies. It covers more than 7 percent of the U.S. equities market, and includes companies with market caps ranging between $750 million and $3.3 billion. The S&P MidCap 400 is part of a series of Standard & Poor's U.S. indices that can be used as elements in a portfolio.
Greg Bordonaro is a Hartford Business Journal staff writer.