ALEXANDRIA, Va. — The National Credit Union Administration announced Friday that it had approved the federal insurance of members' accounts for a credit union recently chartered by the Texas Credit Union Department.
Jafari No-Interest Credit Union was officially chartered Feb. 16. It became the new first credit union in the nation this year and the first state-chartered credit union in Texas since 2008.
The Houston-based credit union will serve approximately 23,000 potential members of three religious associations in the Austin, Dallas and Houston areas of Texas.
The new credit union expects to open in the spring and plans to offer regular share accounts, unsecured loans, share-secured loans and vehicle loans.
Instead of charging interest, Jafari No-Interest Credit Union plans to build profit into the repayment agreement for a loan, with profit replacing interest, under the model of other Muslim-based lenders. (The Jafari School is commonly known as Shia Muslims.)
The Cornerstone Credit Union League also announced Friday that Jafari No-Interest Credit Union will be a member of the league.
Cornerstone noted that the credit union was formed to provide financial services for community members and families of the Islamic Education Center of Houston, the Islamic Ahlul Bayt Association in Austin, or the Metroplex Organization of Muslims in North Texas.
According to a proposal document filed last summer, the credit union will not charge or pay interest; it will use deposits to make no-interest loans; will use member fees to pay for most of its operating expenses ($3/month); it will use voluntary fees/donations to help pay for expenses and build its capital ($7/month); and it will rely on voluntary fees to help build capital to enable more lending ($25-$250/month).
The chartering process for the credit union took about four years, according to Cornerstone. In 2012, the group behind Jafari contacted Linda Winkfein, Cornerstone's vice president of of small credit union development, who started providing direction and guidance to get the group started on their chartering course.
After Winkfein died in February 2014, the new VP of small credit union development at Cornerstone, Lorri Gaither, assumed responsibility for guiding the group toward a completed charter.
"Going through the chartering process, we have seen firsthand that the cooperative spirit of the credit union movement is alive and well," Imran Dhanji, the credit union's president and chief executive, said in a statement. "Many credit unions have willingly offered their expertise and guidance to help us achieve this milestone, and we would like to express our heartfelt appreciation for their support. We are proud to be a part of the credit union movement and look forward to being an active member of the Cornerstone Credit Union League."
The credit union also received help from prominent leaders in the credit union community, including Mentor James Tuggle Jr., CEO of the $36 million-asset Transtar Federal Credit Union in Houston.
"It's been a pleasure to help in any way we can," Tuggle said. "It's always good to see us adding credit unions versus the alternative. This model still works, so we need to figure out how to keep adding them."
Dhanji also expressed his appreciation for the Texas Credit Union Department and, in particular, Commissioner Harold E. Feeney.
"Chartering credit unions that provide consumers with access to affordable services is an extremely satisfying part of my job," Feeney said. "We are very pleased to welcome this new organization as a Texas state-chartered credit union and commend the board and management of Jafari No-Interest CU for their hard work, dedication and resolve."
Jafari No-Interest is not the first "Islamic" credit union — there have been a number of others, including the $121 million-asset Pioneer Mutual Federal Credit Union in Houston and the $113 million-asset Nizari Progressive Federal Credit Union in Sugar Land, Texas.