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Local credit unions see surge of new accounts as Bank Transfer Day Nov. 5 approaches

November 2, 2011

By Jondi Gumz - Santa Cruz Sentinel

Local residents are responding to the call for Bank Transfer Day on Saturday, a grassroots effort started by a young Los Angeles gallery owner frustrated that reforms were possibly leading to new fees by Bank of America, Wells Fargo and Chase.

In just 11 days, more than 34,000 people "liked" Kristen Christian's Bank Transfer Day page on Facebook, where she lists the benefits of joining a credit union.

At the Santa Cruz Community Credit Union, 160 new accounts have been opened in the past month, double the usual number, according to marketing manager Carlos Rodriguez. Most were in the Santa Cruz office.

The credit union's Santa Cruz office, which usually is closed on Saturdays, plans an open house 9 a.m. to 1 p.m. Saturday at 324 Front St. to accommodate people who are planning to transfer their bank accounts.

A similar open house is planned at the credit union's office at 1428 Freedom Blvd. in Watsonville.

Bay Federal Credit Union has seen an upsurge, too.

"On average, we open 300-350 new checking accounts a month, and we just closed October at around 600 accounts, very close to 100 percent growth," said Tonee Picard, Bay Federal's executive vice president and chief development officer. "We are honored the community is choosing Bay Federal and to bank locally."

Big banks hold the lion's share of deposits in Santa Cruz County. Together, Wells Fargo and Bank of America hold $1.9 billion for a 45 percent market Compare that to the two locally owned banks serving the county. Together, Santa Cruz County Bank, founded in 2004, and Lighthouse Bank, founded in 2007, hold $369 million for a 8.7 percent market share.

"I can only hope this movement will begin to change the economic apathy that has been present in this country for the past 20 years," said Rick Hofstetter, president and chief executive officer of Lighthouse Bank. "How interesting that with all the industry abuses of the past few years, which should have sent a bunch of banking executives to jail, none of it seemed to matter to the public."

He pointed out the number of banks in the United States has shrunk from more than 12,000 in 1990 to less than 6,500 this year.

"While community banks, small banks under $1 billion in size, control only 11 percent of banking assets, they provide 40 percent of small business lending in this country," he said. "Will the public continue to believe the big bank spin and the pitch that we need them? That's the million-dollar question."

Despite their smaller deposit base, Santa Cruz County Bank and the Santa Cruz Community Credit Union, with $87 million in assets, rank No. 1 and 2 for small business loans in Santa Cruz County.

Santa Cruz County Bank loaned $7.6 million and Santa Cruz Community Credit Union $3 million for the year that ended Sept. 30, compared to $112,200 for Chase, $58,000 for Wells Fargo and $10,000 for U.S. Bank, according to the Small Business Administration.

"'It's something we've focused on," said Rodriguez of the Santa Cruz Community Credit Union. "For us, lending means jobs."

David Heald, president and chief executive officer at Santa Cruz County Bank said, "We are finding opportunities with locally owned businesses who are experiencing reluctance from their existing banks to provide the accommodations under the terms and conditions that they have historically had in place. We are finding more opportunities for solar and energy-efficiency lending as well."

Sue Chandler, who heads Santa Cruz County Bank's SBA department, reported an increase in refinancing of commercial real estate debt through the SBA's 504 program, "which has the lowest rates I've seen."

One loan just closed at 4.96 percent interest for 20 years, she said.

Wells Fargo spokesman Ruben Pulido noted Wells Fargo was the No. 1 lender for the San Francisco Bay Area as tracked by the Small Business Administration, loaning $70.9 million in that area. He did not have information on lending in Santa Cruz County.

Linda Johnson, an adviser in the SCORE, Counselor to America's Small Business, said large banks such as Bank of America and Citibank are not known to lend to small businesses, especially start-ups.

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