Strategy For Expansion Includes Some 'Funky Stuff'

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A small, struggling community development credit union that was merged out of existence almost a decade ago has come back to life in one of the poorest areas of Washington, D.C.

In 1997, District Government Employees FCU absorbed Alianza FCU, a CDCU that had been formed to serve a primarily immigrant population in the heart of the District. Indeed, there are more than 135 different nationalities represented in the area, although it is primarily Hispanic, with a significant number of Caribbean immigrants, as well. The area has 73,000 residents (30,000 are immigrant Latinos), with a median household income of $36,902 (22% live in poverty).

Continuing to serve those groups was a challenge for DGEFCU, which, despite a history of community involvement, was limited in how much it could do alone with $40 million in assets.

In explaining how DGEFCU came to offer services in the community, CEO Carla Decker told the CUES Annual Convention that the credit union "had a tradition of products and services that were very relevant to the market," but no experience in serving the Latino market. DGEFCU was founded to serve municipal workers in the city of Washington.

One lesson learned; convenience is a strong driver and includes a face and language at the credit union that looks like their face and is their language, especially for people wary of financial institutions.

Given its restraints the credit union reached out to other credit unions in DC, with a commonality among all CUs being international remittances and the ability to lower the related costs. Two CUs eventually partnered with DGEFCU, the $116-million OAS FCU and the $274-million IDB-IIC FCU, to form ACCESSO, CUSO that operates a branch in the heart of Ward One on Mt. Pleasant Ave. NW. Despite the differences in asset size, each CU has an equal stake in the CUSO board. They each also formed an advisory board that is separate from both the credit unions' boards and the CUSO's board, which is challenged with staying in tune with the community. The CUSO branch is in a highly residential neighborhood, and is branded separately. Its mission is to provide financial products and services along with education and financial literacy, to Latino and Caribbean immigrants. The branch, on the first floor of an apartment building, has seven staff members, all of whom are bilingual (none had any CU experience and each was trained at each of the three CUs) and most are "New Americans."

Loud & Proud

"The branch looks like any credit union branch, with the only difference being it has louder colors," said Decker.

Loans of up to $25,000 are underwritten by the respective CU, loans over that threshold are participated. The ACCESSO branch also serves as an outlet of Service Center Corp.'s shared branch network.

The product line at the branch reflects that of the credit union, with some alterations. As a CUSO, it can serve non-members. "If we accept that Latinos have the perception that banks and credit unions are not for them, it takes some time to develop that trust," Decker said. The branch offers check cashing, remittances and other services. It also offers a "SAFE Account," which requires no Social Security Number to open but is non-interest-bearing. SAFE isn't an acronym; rather, it's "safe" to open and a "safe" place to keep money. By not paying interest, the credit unions do not have to report the accounts. Most of the members who access the branch do not have credit reports.

Marketing is primarily done through community outreach, according to Decker, and the branch is often opened to community organizations.

"We do all kinds of funky stuff," said Decker. "We did a community day and had a band playing in the street. We contracted with 20 local restaurants that gave us a fixed-price menu and gave us coupons. People had to come to us for the coupons, so now we have advocates at the restaurants, where we required employees to join. Lately, we've been broadcasting the World Cup matches."

Opened in February, the ACCESSO facility has led to 52 new members, total savings of $197,4000, average share balance of $3,725 (vs. average balance of $3,300 for DGEFCU), and made three loans.

"The benefits to the credit union have been many," said Decker. "The exposure we have received has been very beneficial. The name recognition and reputation has opened new doors, and we've built closer ties to our original sponsor."

(c) 2006 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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