Credit unions have always catered to a wide variety of employee and community groups. Among the most unusual communities served by CUs may be the Amish and Mennonites — descendants of the conservative Anabaptist Christian movement that emerged in Switzerland and Germany in the 16th century and now have about two million adherents in the United States.
There are a handful of credit unions in the U.S. with a significant percentage of their membership hailing from Amish or Mennonite communities. Credit Union Journal spoke to three institutions in this market to get a better picture of what it's like to work with these unusual membership fields.
Providing financial services to these largely isolated faith-based communities (particularly the Amish) present some interesting challenges and opportunities for credit union executives. In addition, there are significant differences between the Amish and Mennonites, who are sometimes mistakenly lumped in as one entity.
Some history: In the late 17th century the original Anabaptist movement broke off into two factions—the more conservative and stricter "Amish" (named after Swiss religious leader Jakob Ammann); and the more moderate and progressive Mennonites (actually an umbrella group of various communities). Other smaller Anabaptist groups include the Brethren, Hutterites and Bruderhof communities.
Everence
W. Kent Hartzler, president and CEO of $154 million Everence FCU, which is based in Lancaster, Pa., explained that the Amish and Mennonites generally share similar values of faith, community service, self-reliance, obedience, submission to God and modesty, but the Mennonites are more integrated with the outside world than the Amish. Mennonites also wear "modern" clothes in public and often work at "regular" jobs in industry outside of their communities. In addition, Mennonites allow telephones and electricity in their homes, along with radios and television.
In contrast, the Amish (who number about 300,000 in the U.S. and are concentrated in the states of Pennsylvania, Ohio, Indiana and Kansas) tend to shun the outside society, keep to themselves on their farms and properties, adorn themselves in plain black clothes, and eschew such conveniences as automobiles, computers, airplanes and others forms of technology. The Amish also reject all forms of vanity and violence (i.e. refusing to serve in the armed forces), and do not go to school beyond the 8th grade.
Despite much isolation from the modern world, the Amish still need loans, among other financial products and services.
Hartzler's credit union, Everence, is part of a multiple-asset financial services company which also offers mutual funds, health insurance, financial advice, investment products and banking services. The Everence credit union is the successor of a prior entity called Mennonite Financial Federal Credit Union and now has about 17,000 members across the U.S. and other parts of the world.
Hartzler, who is Mennonite, estimates that slightly less than half (48%) of his CU's members are Amish or Mennonite.
"Members of the credit union do not have to be Anabaptists, but they generally share common values of community service, simplicity, peace and obedience to God," he said. The credit union compels prospective members to sign a "statement of Christian stewardship" when they apply for membership.
Traditionally, Amish men and women worked on their own farms, but as the agricultural industry has consolidated, the community has diversified its economy as much as possible within the strictures of their lifestyle — namely, by branching out into such vocations as construction and other trade-related jobs.
The Amish may largely be cut off from the Internet, TV and radio, but they do read their community-based newspapers. "We advertise our services in these papers as well as sending out mailings to them," Hartzler noted. "But word-of-mouth also plays a big role in our marketing efforts to the Amish."
Hartzler noted the Amish of central Pennsylvania are generally financially "well off," though a small number are "struggling," as in any other subset of the broader population. Hence, they cannot be classified as either a "low income" or an "underbanked" community.
"Since they finish school after the eighth grade, most young Amish go right to work and start saving their money, and they live quite simply and frugally," he said. "Ironically, one of the by-products of this phenomenon is that by the time they are in their early twenties (college age for non-Amish), they have quite a bit of money saved up and no debt to speak of."
At that point in their lives, some young Amish men take out loans for opening up a small business that may cater to tourists or other endeavors, like construction.
"They tend to be a very good credit risks in terms of timely and overall loan repayments," he added. "The Amish are quite entrepreneurial."
Hartzler estimates that the majority of all loans made to Amish members comprise real estate loans and small business loans. In some cases, after an Amish member applies for a loan, his debt may be secured by his church, which pledges collateral to back the loan. Such an arrangement would be virtually unknown in most other credit unions or banks.
In the rare instance that an Amish member falls behind on a loan payment, or in the extremely rare event of default, other members of the Amish community chip in to help pay off the debt.
Hartzler indicated that in recent years Everence has also provided estate planning services, and some younger Amish who work in "conventional" jobs now access a broader range of financial services.
Reflecting the mission and values of the Mennonite Church, Everence distinguishes itself in other ways. For example, the interchange fee generated from credit cards is donated to various charitable causes.
Geauga
Geagua Credit Union is based in Burton, Ohio, which boasts one of the largest Amish settlements in the country, caters primarily to them (there are virtually no Mennonites in the region).
The $35 million-asset institution (which shares its name with the local county) was founded in 1956 as a financial institution for school employees. CEO Lisa Briggshas been with the credit union for about 30 years and said the focus on Amish accelerated in the early 1990s as an effort to grow membership.
Briggshas said about one-fourth of the credit union's 5,700 members are Amish.
Geauga offers a product that may be wholly unique in the financial services industry — a Horse & Buggy Loan. Since the Amish do not drive automobiles or trucks, they do not need auto loans — but they do travel in old-fashioned horse-and-buggies and they don't come cheaply.
Briggs said that a new horse-and-buggy can range in price from $6,000 to $8,000 from local manufacturers, and are quite popular with young Amish gentlemen. For the older Amish who already own their own horse-and-buggies, the credit union has a hitching post in their parking lot as a convenience.
"We offer the Amish quite a few member business loans," Briggs stated. "We recently provided a line of credit to an Amish fellow who has an existing roofing business and we recently closed on a business line of credit for him."
While the Amish generally have no need for home construction loans (since they tend to build their own houses as a community project), they do sometimes need cash for home repairs or may need unsecured signature loans to purchase big-ticket household items like propane refrigerators. "Home equity loans are a particularly popular product for our Amish members," she added.
Briggs said her CU's employees will make home visits to Amish households to ascertain their financial needs, help them open accounts, hand out loan applications or simply to talk over their options.
Geauga CU also provides an innovative answer to the Amish community's refusal to carry any kind of insurance (they are also exempt from Social Security). Briggs noted that her credit union accepts "Amish aid," a type of insurance that is funded for the Amish by the Amish, as an acceptable form of insurance coverage for loans.
"[Amish Aid] is both health and home insurance," Briggs explained. "Two Amish communities form a fund for the insurance. The communities are not side by side they are separated so that if a catastrophe happens it will not wipe the fund out."
While most of Geauga CU's employees (including Briggs) are not Amish, one of the institution's board members is and he serves as a kind of "liaison" with the surrounding community.
Briggs concedes that, owing to the patriarchal nature of the Amish culture, the overwhelming majority of Amish CU members are men.
But other stereotypes about the Amish are either outdated or outright wrong. For example, Briggs notes that although the Amish do not keep computers at home, she has recently witnessed increase usage of cellphones among younger Amish.
"In any case, we respect their culture and customs and we would never pressure them in any way to conform to the standards of the outside society," she cautioned.
Brewster
Brewster Federal Credit Union, a $20 million institution based in Brewster, Ohio (about eighty miles south of Burton, the headquarters of Geauga CU), also has Amish and Mennonites members. But Debby Gesaman, the CU's compliance and financial officer, noted that her institution is not faith-based and is open to anyone who lives, works, worships within Stark County.
Still, for their Amish members, Brewster CU must make some compromises. For example, they do not require photo identification (as the Amish shun photographs). "We allow them to use other forms of identity to open an account," she said. "For example, if they have had a previous account, we will use a bank statement from that account. Most often we send a letter to their home, asking if they just opened an account and then have them sign it and return to the office."
Gesaman added that the Amish "need a place to handle their finances, [but] the problem most have is they do not have a Social Security Number or photo ID. But they are very familiar with money and the writing of checks."
All in all, said Hartzler of Everence, "the credit union ethos of 'people helping people' perfectly matches the Amish philosophy of community service and self-sufficiency."
