residents credit cards. The unusual partnership pairs a secured card specialist in Oregon with a Los Angeles bank that focuses on lending to people in the south central section of the city. Orchard Savings Bank, Ontario, Ore., began issuing a new secured MasterCard in April with marketing help from Founders Bank, Los Angeles. Both banks are working with Operation Hope Inc., a nonprofit investment bank organization in Los Angeles. Founded shortly after the Los Angeles riots in 1992, Operation Hope provides grants and loans to people and small businesses in financially underserved communities. "CRA is clearly the leverage that opens the door to substantive discussions," between Operation Hope and the financial institutions originating the loans, said John Bryant, the 29-year-old chief executive of Operation Hope. Mr. Bryant expects the new card program to reach a national pool of consumers within five years, but said that for now its primary focus will be people who live in Los Angeles. For every cardholder who is approved, Operation Hope receives $20, which Mr. Bryant said will be poured back into the various programs that the organization sponsors. Orchard is issuing and servicing the card, with Founders providing marketing support through its five branches in south central Los Angeles. Founders Bank was established in 1991 by a group of black investors specifically to serve people in that area. "There is a general sense in the inner city that (residents) want to do business with organizations that are in the community," said Irving Levin, chairman of Orchard Savings, explaining the strategic alliance with Founders. Orchard, established in 1980, owns 110,000 credit card accounts, the majority of which are secured cards. Mr. Levin said that the partners are exploring ways to cross- sell the credit card to Founders' customers. Also, eventually Founders would like to hold the deposits required to secure the line of credit. While the partners do not know the size of the potential market for this product in Los Angeles, Mr. Bryant pointed to the larger world of 26 million consumers who do not have any credit. "It is a worthwhile thing to do even if we only issue 1,000 cards," said Mr. Levin. In addition to a $35 annual fee, the affinity card carries a 18.9% interest rate. When the cardholder graduates to an unsecured credit card, the rate drops to 15.9%. The card will also be marketed to small-business owners, "mostly self- employed people not on American Express' radar screen," said Mr. Levin, referring to the card giant's large share of the corporate card market. In conjunction with the card launch, Operation Hope introduced an educational program called Banking on the Future to teach inner-city students basic banking information. In partnership with a number of Los Angeles schools, Operation Hope will bring bankers into classrooms to talk about basic products like checking and savings accounts and to explain general personal finance concepts.

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