Defining Just What Is 'UNDERSERVED'

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Ann Campbell learned a lesson when she applied with the National Credit Union Administration to serve an underserved area east of the city of Boulder, Colo. The term "underserved," NCUA said, has nothing to do with serving a low-income population.

"It was an educational process for us," said Campbell, vice president of marketing and business development for Boulder Municipal Employees Federal Credit Union. "I thought I was applying to serve a low-income area, but our NCUA regulator said that income makes no difference in the process."

What "serving the underserved" means to NCUA, Campbell said, is making sure that all geographic areas have access to several different options in terms of credit union service.

"Even if there are seven banks in the community, if there is only one credit union present the NCUA considers the community underserved," Campbell said.

The unexpected definition was something other credit unions across the country were learning as well and a strategy many were putting to good use in expanding their fields of membership in ways meaningful both to the institution and the movement.

In the case of Boulder Municipal Employees FCU, founded in 1965 to serve employees first of the City of Boulder and later its surrounding county, Campbell was able to garner the "underserved" designation to expand credit union services to additional sections in Lafayette, a community of 20,000 that lies nine miles east of Boulder.

The $42-million credit union had begun serving Lafayette city employees in 1984. With the addition of the underserved charter, the credit union was able to broaden its membership potential with little extra cost. Boulder Municipal Employees Federal had applied to serve the entire community, but only gained two of the city's 10 census tracts. Service to these areas began in February 2004, Campbell said.

The two tracts comprise a mix of residential and business neighborhoods, and there certainly is some representation of low-income residents in that mix, Campbell said. But there are few large employers in the new areas, making standard select-employee-group development strategies somewhat ineffective, said Campbell.

"It's a way to grow our credit union, but it's not without its challenges," Campbell said.

Boulder Municipal Employees Federal does have a branch in Lafayette, but it was developed outside of the expansion efforts to served underserved areas. Campbell has other efforts in mind to promote growth in those two tracts, she said.

"Eventually, I want to go door-to-door to every business in our service areas in Lafayette to introduce them to the credit union," Campbell said.

Those businesses include things like realtors' offices, gas stations, restaurants and antique shops, all of which can benefit from credit union membership but none of which individually constitutes a large cache of potential members, Campbell said.

Upbeat Prognosis

The one exception is a large hospital going up in one of the underserved tracts, but Boulder Municipal Employees Federal won't be the only financial institution bidding on services there, Campbell said. The hospital is taking requests for proposals from all institutions interested in establishing a presence in the facility to see who might provide the best fit for staff and physicians, she said.

Boulder Municipal Employees FCU is upbeat about serving the new areas in its field of membership and anticipates spending about $5,000 to develop business in the underserved census tracts, said Campbell.

As of yet, no target amount has been set for possible financial gains from the area and the credit union won't be able to judge potential financial impact for some time to come, she said.

"We've done postcard mailings, advertising in the local paper and have become involved in community events in an attempt to get our name known," said Campbell. "Anyone who lives, works, worships or attends school in the areas we serve-which includes downtown Lafayette-is eligible to join. Our biggest challenge is trying to qualify walk-ins at the branch."

One way that BMEFCU has been effective at doing just that is through its affiliation with KGNU, a Boulder-based independent listener-sponsored radio station that sells memberships to generate financial support.

Anyone who belongs to KGNU can belong to the credit union, and that seems to be the best way for citizens of Boulder, Lafayette or any of the other surrounding communities in listener range to qualify for credit union service, Campbell said. The city of Boulder also sponsors a senior group, the members of which can qualify for the credit union's Gold Rush program, she said.

Boulder Municipal Employees Federal finds the KGNU affiliation an effective way to expand services in a controlled fashion. The credit union has considered pursuing the entire city of Boulder which, while having some underserved areas, is home to much of the nation's most expensive real estate. But officials aren't yet ready to take that leap, said Campbell.

"We certainly have our eye on it, but we're not ready quite yet," Campbell said.

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