A recent hike in the cost of applying for U.S. citizenship is providing bankers a fresh opportunity to court Hispanic immigrants as customers.
Citizens Union Bank of Shelbyville in Kentucky started offering citizenship loans at a branch that it opened early this month to target Hispanics. A small bank in Milwaukee and a credit union in Chicago have been making such loans for several months.
While the loans are not big moneymakers in and of themselves, bankers hope immigrants who take out the loans will then open checking or savings accounts and, eventually, take out loans for cars, homes, or businesses.
"What better way to build loyalty than to make somebody a loan for them to become a citizen?" asked Ed Jacob, the manager at the $7 million-asset North Side Community Federal Credit Union in Chicago. "This is the most important loan that they will ever get in their life."
The cost of applying for citizenship increased about 70% on July 31, to $675. So when Citizens Union opened its newest branch - under the "Nuestro Banco" brand, Spanish for "Our Bank" - it decided to offer loans to immigrants who otherwise might have been scared off by the fees, said Billie Wade, the bank's president. "It is a good opportunity for those that are eligible to go and gain their citizenship," Mr. Wade said.
The branch was designed to be inviting to Hispanic immigrants. It is decorated with bright colors and photos from Latin American countries, and all its staff members speak Spanish.
Immigrants who are at least 18 years old and have lived in this country legally for five years are eligible to apply for citizenship. So are those who have been married to and living with a U.S. citizen for at least three years, or who have served in the armed forces and have been a legal resident for at least a year.
The $82 million-asset Mitchell Bank in Milwaukee began offering the loans about six months ago to encourage people to apply for citizenship before the fees went up, said James P. Maloney, the bank's chairman. It does not expect the loans to be profitable, he said, but he hopes they help build up its customer base.
"We felt very early on that if we lent money to people to become citizens of the United States, they would think very favorably of us, and we would probably have a customer for life," Mr. Maloney said.
North Side Community began making such loans in February. The first borrower was Maria Noriega, a nanny who had come to the United States from Mexico 19 years ago. She had completed all the steps for citizenship except filing the final application, which cost $400 at the time. "The $400 was the last thing in the way," Ms. Noriega said in February.
Hearing about the proposed fee increase prompted her to take out the loan, she said.
Mr. Jacob said that as of the end of July, North Side had made 48 citizenship loans, which have a 10% interest rate. Before the fee increase, borrowers had six months to pay off the loans, but now they have nine months, he said.
The credit union gets its business through referrals from a nonprofit that helps people apply for citizenship. The checks are made out directly to the government, so they cannot be used for anything else.
Mr. Jacob said that bankers targeting Hispanics should offer these loans, because they fill a need and demonstrate a commitment to the community.
But bankers need to work with organizations within the community that are helping immigrants apply for citizenship, because few of these potential customers are likely to come in on their own, he said.
