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NEW YORK — Hamburgers, fries, and a 99-cent surcharge ATM transaction are on the menu at many McDonald's restaurants throughout New York City, generating more than $4.7 million in annual gross revenue for Actors FCU.

AFCU has 240 ATMs, 95% of which are located in McDonald's restaurants primarily in New York City. The $138-million credit union prices its foreign ATM surcharge at just under a buck, a price point one McDonald's executive once told the credit union is the key to making the ATM a consumer "destination."

"Make the price a dollar, dollar-fifty, and consumers see your ATM as a convenience," said CEO Jeff Rodman. "Set the price at 99 cents and it changes their mindset, has them seeking out your ATM and coming back again and again."

Rodman got that advice more than 10 years ago from the owner of the first McDonald's that agreed to partner with the CU, and it has paid off. "He was a savvy marketer and really liked that price we suggested, because most banks were charging $2. He knew 99 cents would keep people coming back to our ATM, and ordering from McDonald's."

AFCU, which serves the entertainment industry, expects to net $1.4 million annually from its entire ATM network, which averages 350,000 withdrawals a month. One-third of the transactions are surcharge free, for which the credit union is compensated by the CO-OP, Allpoint, and SUM networks.

All of the credit union's non-interest income is expected to come in this year at $6 million, $1 million above projected interest income. Overdraft revenue ($25 per item) should be $550,000 this year, and money services-including a unique arrangement to deposit checks from local check cashing businesses-is targeted to produce $420,000. Rodman said the credit union's general fees, such as $5 per returned deposited check and $1.99 for bill pay, will account for $234,000 in 2011. The debit card program is break even, factoring in expenses to run the program, including fraud.

The credit union's net income before NCUA assessments for 2010 was just over $1 million, putting capital at year end at 8.86%. ROA came in at 78 basis points prior to stabilization expenses and the NCUSIF premium.

With the CU employing one staff member to work directly with McDonalds to extend the ATM franchise rights, and to talk with other area businesses to increase its ATM footprint, surcharge income is expected to continue to grow. "It's great marketing for the credit union, too," said Rodman. "The 99-cent ATM has become our brand, we're known for that. We used to advertise a 99-cent ATM on the doors of McDonald's."

That led to some interesting food orders, noted Rodman. "Occasionally McDonald's would get orders for a hamburger, fries, and a 99-cent ATM."

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