I tweeted about this earlier (yes, I admit I do tweet from time to time), but I feel that Jason Biggs (American Pie movies) comments about Ann Romney and Janna Ryan is one of the most offensive comments I have seen from anyone in a long time. Anyone that knows me, knows I bleed Red, White and Blue and I support the constitution 100%, including the First Amendment, but I am sure that our forefathers did not intend for the First Amendment to include comments such as the ones Biggs has made.

Yes, Jason Biggs has a right, under the First Amendment, to speak his mind, but tweeting a vile attack against two women, whom I will assume he has never met, is just plain rude. Common sense (which obviously Biggs is lacking) tells you that this is not a good or right thing to do. I was raised that you open doors for ladies, you never hit a lady and you certainly do not make comments like Biggs made about ladies. Unfortunately, and especially in Hollywood, this type of behavior has become more common than not, by actors but that does not make it acceptable. And what is even worse, Nickelodeon uses Biggs for a voice over of a Teenage Mutant Ninja Turtle, so our kids are also listening to him. Actors should be setting examples for people, especially our young people who are very impressionable. Comments like Biggs’, make our younger generation think that this is acceptable – it is not.

Ok, enough for my Friday soap box, I will end with Jason Biggs’s parents must be very proud of a son who can make comments about ladies such as the ones he has made. I only hope he refrains from such comments around his mother!

If you’re paying more attention to where your money goes, you’re not alone. Nationally, our financial behavior has changed dramatically in recent years. Americans are taking control of their money, spending cautiously and re-thinking everything financial. We’re keeping our cars longer, eating out less, and “couponing” more. And, with smarter consumerism, we’ve seen a return to a hallmark of credit union lending that others in the business would have declared dead.

Personal loans are back and they’re gaining in popularity. Once the “go-to” loan for members who needed cash for unexpected expenses, personal loans were passed over by consumers who turned to credit cards. These days though, consumers are returning to personal loans. With their fixed rates and set payments that never change, personal loans are worry-free. And, credit union members enjoy the control of knowing exactly when their loan will be paid off.

Life has plenty of “uh-ohs”, and there’s no chance of anticipating for them. The broken washing machine, a flat tire, a fender bender that’s not covered by your deductible. Getting quick cash for the “uh-ohs” is what personal loans are for. At ESCU, we’ve been working to get our members their loan cash quicker, with a 30 minute approval on personal loans. We’ve added an online loan application to make it convenient for you to apply from anywhere. Browse our online loan application at www.escu.com or stop in at one of ESCU’s branch locations to find out more about personal loans. Maybe we can turn that “uh-oh”, into “oh, yeah”!

I hope everyone had a great Christmas, New Year and holiday!  It sure was a busy time for everyone I know.

In welcoming 2012, I have some mixed emotions.  I believe 2012 is going to be a very good year for ESCU and our members. On the other hand, as far as the general economy goes, I do not think we are going to see much change over 2011.

Let’s start with ESCU.  The biggest news is our new branch!  We are currently looking at mid-March for our opening and probably April for our grand opening.  As you may know, this will be ESCU’s first standalone branch and I can tell you that everyone here is very excited to see it open.  If you live in the Indian Lake/Hendersonville area, I invite you to take a moment to drive by and see our progress.  I have been told that if the weather holds, the stone masons will be starting their work on the exterior the second week of January.  Trey, the branch manager for Indian Lake, is barely able to contain himself, so when the office does open, please go by and say hello to him and the staff there.

We are also planning to offer some new products.  We are currently working on adding a feature to Virtual Branch where you can download your statements to Quicken or QuickBooks on a monthly basis.  After that, we are looking at business checking for all of you that have small businesses.  This will be a great product that will help you keep your business and personal funds separate, but at the same institution!  We also just finished up our state exam and came through with flying colors – what a great way to start 2012!

On the economy side of things, I cannot be as upbeat.  Even though it is an election year, I do not see the economy making any significant gains in 2012.  For that matter, I do not see 2013 being a whole lot better.  Rates are going to continue to be low on both the lending and deposit side.  The flip side here is that if you are intending to purchase a home, I predict you will never see (in my life time) rates as low as we are seeing today.  3.5% for a 15-year fixed-rate mortgage!  When I started over 20 years ago, I was seeing mortgages considerably above the 10% mark.  The moral of this story:  rates are at historic lows. Do not sit on the sidelines and hope they are going to drop more – now is the time.

I believe the U.S. economy is still going to be struggling with the world economy as Greece, Italy, and other European countries struggle with their debt and lagging economies.  This is also impacting the Euro, which is another factor placing downward pressure on our economy.   I am not even going to get into what the federal government is doing to our economy, even though it is an election year…

Fortunately, I do not see that economy will be getting any worse (at least I certainly hope not), but without my crystal ball, I cannot guarantee it will not.  One last thought on our economy – you know we have issues when diesel fuel, made from what is left over after refining fuel oil into gasoline is more expensive than premium grade gasoline.  It should be the other way around in a good economy.

With that, the good, the bad, and the ugly, I wish for each of you to have a great and prosperous 2012.  Enjoy your families and loved ones and when life gives you lemons, make some lemonade!

You may have seen the news recently about Occupy Nashville and Phil Williams complaining about NES rates and what top executives spend. First, I took a good look at the Occupy Nashville protestors: about 20 people, 4 sets of overalls, 2 misspelled signs, 1 dog and a skateboard…
All I can say is that their 99% does not represent me.
Now let’s talk about rates. I sampled two utilities that generate their own power and also purchase some, Southern California Edison and Riverside City Electric. SCE is a privately held company and Riverside is a municipality. Here is just a down and dirty review (copied from their web sites) as to how they compare kWh to NES.
Southern California Edison:
Five-Tier Price Structure Sample*

Cents per kWh:

Tier 1   Tier 2    Tier 3     Tier 4   Tier 5
13¢       15¢        23¢      26¢       30¢

Here’s an example:
Your central air conditioner may use 15,000 watts (15 kilowatts) of electricity per hour, costing about $1.80 per hour to run in Tier 1. Throughout the month, if you use your A/C often, your electricity usage will rise, and you may move into a higher price tier. Leave your air on all day and night one month, and your usage may spill into Tier 5 and the same air conditioner can cost you about $4.20 per hour to run.

Riverside:

Summer Season:
Tier 1 (0-750 kWh, per kWh) $0.1035
Tier 2 (751-1,500 kWh, per kWh) $0.1646
Tier 3 (Over 1,500 kWh, per kWh) $0.1867
Winter Season:
Tier 1 (0-350 kWh, per kWh) $0.1035
Tier 2 (351-750 kWh, per kWh) $0.1646
Tier 3 (Over 750 kWh, per kWh) $0.1867

As you can see, each utility has a tier system based on the amount of consumption by a user. The more a customer uses, the higher the tier and hence the higher their monthly utility bill will be.
Now NES:
Energy Charge:
Summer Period 9.559 ¢ per kWh per month
Winter Period 9.276 ¢ per kWh per month
Transition Period 9.100 ¢ per kWh per month

As you can see, NES is by far the cheapest of the three utilities and they purchase their electricity from TVA. Did Phil mention this in his investigative report – NO! If you were to ask any of the Occupy Nashville protesters about this, do you think they could give you an honest answer? NO, because they have no idea. Most people just listen to what Mr. Williams has to say (and sometimes he does have some good things to say) and take it as gospel, but in this case he is just telling people what is going to increase ratings but not the entire story. Now don’t get me wrong, investigative reports are great when done in a complete, balanced manner, the same way an audit is helpful to any organization. Unfortunately, when you are just trying to incite people in order to increase ratings or such, it does more damage than good.
And yes, Mr. Jenkins earns a good salary, but look at how profitable NES is. It goes back to the old adage, “you get what you pay for.” Pay a good, competitive salary, and you get good people that are at the top of their field, not just a college graduate who has no real world work experience and no idea how to operate a company, let alone one as complex as NES. Mr. Jenkins is worth every penny he makes as NES is one of the most profitable Metro agencies in Nashville. And if you think Mr. Jenkins get paid a lot, let’s look at Bill McCollum, Jr., COO for TVA who is paid in excess of $1.5 million a year and Duke Energy’s COO James L. Turner who is paid in excess of $4.3 million a year. Neither of these individuals is the president of their respective companies, so you can only imagine what the President/CEO’s are being paid. The last time I looked, TVA had a $24 billion debt due to the 2008 coal ash spill they are still paying for. Bottom line, NES is getting a bargain paying Mr. Jenkins what he makes compared to a lot of other public and private utilities.
These are just my thoughts, and this investigation only took me about an hour of my personal time.

How Credit Card Compromises Effect You:

Everyday millions of Americans use their credit and debit cards for purchases at retailers, restaurants, fast food, on line, gas stations and many more places. All of these merchants use “credit card processors” to clear these purchases through Visa, Master Card, American Express and other card issuers and to guarantee they will be paid for your purchase.

How this process works is that when you purchase an item, the merchant swipes your card for a transaction, the card number and other information contained on the magnetic strip, amount of the purchase and merchant number are transmitted to the processor who then connects with the issuers (Credit Union, bank, etc) for approval or denial. After the approval or denial is issued and sent back to the merchant, the processor is only supposed to keep on their system the last 4 digits of your account number, the transaction amount, and the merchant id. Some processors are of the opinion that the cost of the software to remove all but the last 4 digits of your card number is too expensive and therefore make the business decision not to purchase the software. Unfortunately, hackers know this and target these processors to obtain credit card numbers. No one is immune to this as card holders cannot choose who a merchant uses to process their transactions and therefore are at the mercy of the processors.

What does this mean for the consumer? Every consumer needs to be very diligent about reviewing their monthly statements and responding to any written correspondence from their card issuers. Do not give any information to anyone calling and representing themselves as being with your card issuer and needing information. If a consumer ever finds themselves in this situation, where your card number has been obtained fraudulently, (the odds are it is not a matter of if, only when this will happen to most consumers), it can be very labor intensive for consumers to correct. With automatic deductions being taken from their credit cards, automatic payments to their cards, or if it is a debit card, the consumer may have to close their account which may present another set of obstacles to overcome. Even though this can be a lot of work, the alternative can be exponentially more labor intensive for the consumer in trying to regain the lost funds. Remember, according to Federal Law, a consumer has 60 days to dispute a charge, after that, you own it. If your card number is obtained fraudulently and you have not opted to obtain a new card and/or you have not checked your statement monthly, you will be in for a lot of paperwork to prove that the charges were not made by you and not be held responsible for them. Remember, you must catch and report them to your credit card issuer within 60 days of receiving your statement. You also run the risk of not only having your card number compromised, but if the “fraudster” can cross reference any of your personal information to the card you may also become the victim of identity theft.

Bottom line, take heed to what your card issuer is requesting you to do via written correspondence that can be verified, as it may take some initial work on your part, but it will save you a lot of grief in the end. It will also keep costs down as the issuer will not pay as much in fraud claims that are usually passed on to consumers.

Recently, there has been a lot of talk about interchange fees due to the creation of the Durbin Amendment on the Dodd-Frank legislation.  You may have heard radio ads for the pros and cons of reducing interchange fees recently, but unless you have an understanding of what exactly interchange fees are, the commercials might as well be done in Greek.

For obvious reasons, a lot of people have no idea as to what interchange fees are as they do not directly affect their everyday lives.  However; as the debate over interchange fees has come into the national news media spotlight, I have been asked on several occasions to explain what exactly these fees are, how they impact consumers and why all the debate.

So here is a brief education on Interchange Fees and my thoughts regarding them.

First, interchange fees are fees charged to retailers for accepting and processing your debit card and credit card transactions.  For the purposes of this conversation and the Durbin Amendment, I am only referencing Debit Cards.  On average, interchange fees are about $0.44 per transaction and are based on the dollar amount of each transaction and therefore can be more or less than $0.44.  When a retail merchant/store processes your debit card transaction, it goes through a merchant service provider who takes a percentage for processing the transaction.   Visa/Master Card/etc for the use of their logo and system take a percentage; and finally the card issuing financial institution gets a percentage to guarantee the merchant that if the transactions is approved they will receive the funds.   Write the same merchant retailer a check and there is no guarantee the check will be good when presented to the person’s financial institution.  Hence, the fee is an insurance policy of sorts for the retailer guaranteeing them that they will receive funds for the items that were purchased, a very inexpensive policy at that.  Proceeds from interchange fees are used by the financial institution to fund fraud protection programs, processing of the items and other programs associated with debit card programs.

Now that I have given a modest overview of what interchange fees are and what they are used for, let’s look at why merchants are complaining that these fees are too large and should be decreased.  Walgreens, a billion dollar company, compelled Senator Durban to create his amendment with the argument that they would give the excess funds back to their customers in the form of reduced prices.  I do not mean any disrespect to these companies, but in business 101 they taught us to build in all costs to our pricing models for all goods being sold.  These companies have built the interchange fees into the cost of the products they sell and any reduction of these fees is just going directly to their bottom line.  If you think for a moment that consumers are going to see a reduction in prices,  I have some beach front property in Arizona to sell you.

The cost of debit card programs is not going to change just because the interchange fee has been reduced and therefore, financial institutions who offer debit cards are going to have to find other ways to fund debit card programs.  The big banks are talking about doing away with free checking accounts, limiting the amount you can use your debit card for with merchants and charging an annual fee for the privilege of having a debit card.

The Dodd-Frank bill was meant to protect consumers, but all the Durbin Amendment is doing is increasing the bottom line of retailers and costing cash strapped consumers more.

I encourage everyone who reads this to do their own research on the Dodd-Frank legislation and forward this to your friends and families as everyone needs to know about this and how it is going to impact everyone!

Credit Unions – no two are exactly the same.

People have asked me in the past, why are your rates lower than other institutions? Or conversely, why are your rates higher?  This is an extremely valid question as no institutions, no matter how similar they look alike on the outside or by name or by what services they offer, have exactly the same business model.

What I mean by this is, each one is its own business, has its own business model and operates differently.  Lets narrow this down and only look at credit unions.  There are 34 credit unions in the Davidson county area.  They range in size from over $415,000,000.00 to just $1,200,000.00.  For the purposes of this discussion, we will only look at the credit unions over $50,000,000.00 as these credit unions offer similar products to all members.

Some of these credit unions are heavy on the deposit side.  They offered and still may be offering higher than average deposit rates*.  A major reason for this is member makeup/wants.  The membership may require better deposit rates to stay with the credit union.  In the past, the members may have taken advantage of long term deposits with higher rates, or the credit union does not offer a large amount of alternative deposit products for their membership to invest in and hence to keep deposit has higher than normal deposit rates.  Whatever the reason may be, they are taking care of their members and offering products that the membership has historically requested.  However, by doing so, they cannot afford to lower loan interest rates beyond a certain threshold.  If they did, they would not be able to make enough interest income to cover the interest they are paying on deposits.

On the other hand, if a credit union’s members have historically deemed loans and loan rates to be more important than deposit rates, the credit union will generally have lower rates on loans, but in doing so, their deposit rates will also be lower as the credit union will not be earning as much interest income and therefore not in the position to pay out higher dividends.

The difference between deposit interest or dividends paid to members and loan interest income is called the interest rate spread.  In most cases, for a credit union to operate efficiently they need to maintain an interest rate spread of approximately 3% or better depending on each credit union’s total operating expenses (interest rate spread = the average of all loan product interest rates – the average of all deposit product interest rates).  At the bare minimum, the interest rate spread needs to be enough to cover the difference between operating expenses and non interest income.  If non interest income and interest income do not equal or exceed operating expenses, the credit union will not be in business for very long.

This scenario is not easily changed as a financial institution cannot perform a wholesale change in rates, up or down, overnight.  If an institution is making auto loans at low rates today, (the average auto loan used to stay on the books for about 24 to 27 months, but due to more recent economic factors people are holding on to their cars somewhere between 36 and 48 months on a national average) it cannot decide tomorrow to drastically raise deposit rates tomorrow.  The institution’s cost of funds would increase and possibly even give them a negative interest rate spread.    The longer it takes to pay off a lower rate auto loan, the longer it will take to raise rates and replace it with a higher paying auto loan.

Generally speaking, most credit unions are going to have better loan and deposit rates as the interest rate spread is usually lower than big banks and credit unions do not charge as many fees as big banks do.  In another blog, I will go into interchange fees and how they are going to affect consumer fees, but that is another story.

I hope this gives you a little insight as to why you may see different rates at different financial institutions.  As always, if you have any questions, please feel free to stop by or give me a call.

*The term “good rates” is a relative term and what the definition of a good rate is varies with the peaks and valleys of the economy.

Well folks, I am back and wow was it an exciting 2010 for ESCU!

I do apologize for being a little remiss at not writing a lot on my blog last year, but conversely we added a number of new products to better serve you and make ESCU more efficient.

As far as products go, WOW did we add some good ones.  We now offer home and auto insurance through CUNA mutual and from what I have been hearing, they are beating some of the big insurance company’s rates on both home and auto insurance.

Another exciting product we have added to our lineup for you “techies” is Mobil Money.  You can now use your smart phone to download ESCU’s book mark and have access to your money via your smart phone.  Several members have commented to staff on how much they like this product. We are also now paying 3.99% on our new Interest Rewards Checking account.  To take advantage of this account all you have to do is meet some very easy requirements to earn 3.99% on a free checking account!

Have you taken advantage of our Platinum Visa Card yet?  At 7.99% with rewards it is one of the best Visa cards in the nation!  We still offer the Gold and Classic cards at a slight higher interest rate to compliment our Platinum card!

Possibly one of the biggest steps that ESCU has taken in the past year was to convert our data processing system to a much better and robust system.  As many of you know, this took place on 12/1/10 and the staff and management team greatly appreciate your patience while we made this conversion.  For anyone who did have problems with their account, I sincerely apologize as our intent was and is to have one of the most user friendly systems to better assist our members as possible.  For the most part, you as a member will not see these upgrades, but trust me, they are benefiting everyone and will continue to do so for many years to come.  The previous data processing system ESCU was using was acquired in 1973 and has just become outdated in many areas which necessitated the change.

2011 is going to bring more added features to you as a member so be on the lookout for more of my blogs, advertisements and more to keep you updated.  Also, if we do not offer a product or service that you think would benefit ESCU, please stop by, call or email me any suggestions so that we can better serve all the financial needs of our members.

I have now been asked a couple of times the question:  “why did ESCU become a community credit union?”

The answer to this question is both simple and complex, but the bottom line is survival.  In years past, Electric Service Credit Union relied upon the employees of NES to fulfill the membership needs of the Credit Union.  Looking to the future though; the number of NES employees and retirees are a diminishing number due to various reasons.  People move, positions are not refilled, and modern technology are all contributing factors and a more than ample reason that ESCU have to expand it’s services to the community of Davidson County and possibly other counties in the future. 

A Credit Union’s survival depends upon membership, without membership the credit union’s capital will decline, possibly to a point of what is called by the state “prompt corrective action” status.  This occurs when a credit union’s capital falls below 7%.  Even though Electric Service Credit Union’s capital ratio is almost 10% above this, if we were to lose too many members our capital ratio would decline.  Mind you, it would take a lot of members leaving ESCU for this to occur.  Instead of allowing this to be the case, the management team at ESCU decided to be proactive and open the credit union to the community of Davidson County.  Although this did present some challenges to the credit union, as there can be differences between an NES employee/member and a member of the community as to what their financial needs, services and credit situation may be we have very diligently reviewed all of our policies to ensure we not only provide the best service, but maintain the highest level of security.  With today’s ever changing economy, we are consistently monitoring and updating policies on a daily basis to maintain the strength of ESCU.

One of our missions is to provide the best service to everyone so that we can continue to offer all of the services we do and make your life as an ESCU member easier.

As I sit here in my office today and reflect on what has happened over the last week or so and what needs to happen over the next several months and even year, I realize how lucky I am that my family and I moved to Middle TN. The way that everyone has banded together to help perfect strangers is just amazing. For the people of Middle Tennessee to overcome the adversities that have been placed in front of them is nothing less than awe inspiring and makes me proud to live in an area with people that are truly an inspiration!

I have spoken with many friends across the county and most of them had not heard anything about the flooding until the Tuesday or Wednesday after the flooding occurred. I can only surmise that because we were able to keep crime at a minimum the national news services did not care about Tennessee. Crime sells, people helping people does not – which is a sad commentary on our society and major news outlets!

I feel we are truly blessed for the people that live in our communities as these are some of the best people on earth and I for one am glad that I am here – even with the floods and tornados this is still one of the best places on earth!

Thank you Middle Tennessee – you deserve far more recognition than you have received for all of the great things you have accomplished during this trying time.