Why 1 CU Is Expanding In Underserved Philly
American Heritage Federal Credit Union wants low-income Philadelphia residents to help it boost membership by 5% and expand assets at a rate twice as fast by year's end.
After being approved to add the city of Philadelphia as an underserved area to its FOM, CEO Bruce Foulke said he sees assets rising 10% to "break the half-billion mark" and some 3,750 new members in addition to its 70,500 current members by the end of the year.
While the number of branches will stay at 15, a branch located in the neighborhood of Hunting Park will be expanded to better cater to the low-income area in the north of Philadelphia. Six employees will work in the expanded branch. While upgrade investments must yet be set, they will be "below $1 million," he said.
American Heritage will also increase assets by trying to lure new certificates of deposit and money market accounts through higher rates. There will be more advertisement too, he said.
The credit union was founded in 1948 to serve employees of The Budd Co., maker of fenders, roofs and side panels for vehicles and one of Philadelphia's biggest employers in the past century. In 2002, Budd, now part of ThyssenKrupp Automotive AG of Germany, closed its last plant in Philadelphia to relocate operations.
Foulke said Hunting Park residents are poorer than others that the credit union serves. There is a "mixed" population in the area with no demographic group weighing more than another, he said. There are no bank branches either, while the crime rate isn't particularly high, he added.
American Heritage FCU already has members in the area from select employee groups it serves. Banks may have left the area as they weren't making much profit, he added.
Foulke said that while the area may not be attractive to banks he sees "great potential" to lure members through "lower-cost loans than what banks have offered."
Rates on personal loans to be offered will carry rates below the 18% to 20% that banks demanded and will range from 8.5% to 16.9% he said
"We also want to push first mortgages. We have a lot of people there that would qualify for mortgages," he added. The average size of a mortgage loan in the area may range from $30,000 to $60,000.
He said that credit won't necessarily be riskier than that for those members living in wealthier neighborhoods. "I know people in affluent areas that have poor credit," he said.
American Heritage took its current name in1985 to reflect changes in its membership and now serves employees of some 650 companies, the company says in its web page. It is one of Pennsylvania's 10 largest credit unions.