PONTIAC, Mich.-Affinity Group CU here has partnered with local non-profit Operation: Kid Equip to create a branch of the CU that will help benefit students and teachers in the region.
The new, virtual branch-known as OKE Financial-opened in March and serves anyone who lives, works, worships, attends school or owns a business within the five counties of southeastern Michigan. AGCU serves 21,000 members with $155 million in assets. OKE Financial is just one of several different brands that operate under the Affinity Group umbrella; others include Municipal Health & Services, Crestwood Community, WySouth, Kensington Valley Community and, most recently, St. Cletus CU.
"Our model allows us to have these brands," explained Matt Jenkins, AGCU's VP of marketing and public relations. "The state requires that there is only one credit union, and that's Affinity Group CU, but our brands are a part of AGCU. With our model, it's easy to develop this conceptually, because OKE Financial is just another one of our brands."
Sharing Revenue
The new brand aims to share a portion of its revenue with Operation: Kid Equip, which will then pass that money on to teachers in the community to help them better provide for their classroom needs, including making up for expenses that often come out of teachers' own pockets.
OKE Financial currently only just eight members, and COO Carma Peters explained that "the way we're doing this is almost like a start-up credit union."
"We're still in our infancy," said Jenkins, "but we've found that as we're able to communicate what it is that we're trying to do and we begin to build relationships with some of those groups-teachers, volunteers and supporters of Operation: Kid Equip-people have decided to join the CU."
With the virtual branch, members of OKE Financial can use other AGCU branches or shared branching for any in-branch needs, as well as remote deposit capture services. As AGCU absorbs other brands, those employees stay on as AGCU staffers, some of whom now serve OKE Financial members. Jenkins said a physical branch for OKE Financial is not currently on the horizon.
OKE Financial's focus right now is on building loans from new accounts, rather than on boosting the number of members, said Peters. Auto loans and debt consolidation are the biggest products right now, and the goal is to reach $500,000 in loans by the end of the year.
"That seems really small, but it's pretty large when you're basically starting up a new brand, not merging an existing membership base," offered Peters, adding that organizers expected to have some initial lag time since OKE Financial launched right before summer-a time when many people aren't as focused on schools as during the rest of the year.
Auto loans are expected to comprise about 60% of total loan volumes, followed by debt consolidation (30%) and home equity (10%).
In the hopes of boosting lending, OKE Financial is currently offering a promotion allowing members to lower their rates by up to two percentage points when they transfer loans to the credit union, down to its floor rate of just below 2%.
How The Agreement Works
Peters said that the agreement with Operation: Kid Equip stipulates that after the branch recovers initial startup costs, the charity receives 10% of the branch's monthly net income, a figure which is set to be reviewed on an annual basis.
"We would be thrilled if we reached $10,000 to Operation: Kid Equip by the end of the year," said Peters. "Our hopes are that this becomes a lifelong partnership, and over the years it will equal $50,000 and much, much more."
