Innovative Products and Strategies for the Underbanked Freedom … · 2020-05-08 · Borrow & Save...
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Innovative Products and Strategies for the Underbanked Freedom First Credit Union Borrow & Save
Transcript of Innovative Products and Strategies for the Underbanked Freedom … · 2020-05-08 · Borrow & Save...
Innovative Products and Strategies for the Underbanked
Freedom First Credit Union
Borrow & Save
Freedom First Credit UnionSouthwest Virginia
www.freedomfirst.com
Dave ProsserSVP Community Development
• Headquarters: Roanoke, VA
• Year Chartered: 1956
• Charter Type: Community
• Membership: 47,500 (66% LMI)
• Assets Size: $375 Million
• Designations:
– NCUA Low-Income, 2010
– US Treasury CDFI, 2010
Impact Banking Products • Borrow & Save
• Credit Builder
• Individual Development Accounts (IDA)
• Micro Loans ($250-$3,000)
• PAL Loans (Payday Alternative Loans)
• Responsible Rides
• Affordable Housing Program
• Workforce Development
• American Dreamer Loan
• Track 2 (Second Look Customized Loans)
Source: Pew Charitable Trust
Impact Banking Products • 2010: $1,298,824
• 2011: $1,041,254
• 2012: $1,745,706
• 2013: $1,446,000
• 2014: $2,295,875
• CU Reporting- 12• Total # of Loans- 2,430• Total Amount- $2,394,231• Average Loan- $985• Total Savings- $804,218• Average Savings- $331• Average Income- $33,207* As of April 31, 2015
Borrow & Save Guidelines• 12 – 36 month repayment period
• $250 - $5,000
• Max 18% APR
• No Application Fee
• 50% of loan proceeds are deposited into locked savings account, released at maturity, for asset building
Borrow & Save Loan Data
Loans Opened Credit Score
Loans Opened Opened Loan $ Amount Pledged $ Avg No CS
2Q2015 38 $80,670.28 $42,835.14 594 4
2014 211 $518,563.76 $260,462.95 569 54
2013 187 $335,894.52 $172,249.95 588 63
2Q2012 128 $236,808.00 $120,145.00 576 32
Total 564 $1,171,936.56 $595,693.04 582 153
Weighted Average Rate 16.20%
Borrow & Save Loan Data
Total # LOW Income MODERATE Income HIGH Income NO
Opened # Members Loan Dollars # Members Loan Dollars # Members Loan Dollars DATA Loan Dollars
2014 211 172 $400,752 29 $89,608 10 $28,204 0 $0
82% 14% 5% 0%
Monthly Income * ( <$3,354 ) ($3,354-$5,029) (>$5,029)
Borrow & Save Loan Data
Borrow & Save Profitability Snapshot Product Profitability Since 1/1/2014
Interest income $ 84,596.98
Cost of funds 2,642.53
Net interest margin 81,954.45
Less: loan losses 24,638.25
Net interest margin after loan losses 57,316.20
Non-interest income 5,000.00
Expenses:
Operations (IT or third-party expenses) 23,560.50
Salaries 4,311.00
Marketing 250.00
Total expenses 28,121.50
Product net income (loss) $ 34,194.70
• Meets a critical need with a reasonable and responsible amount of risk
• Sustainable product, with ample room to set a rate that is reasonable for consumers and cost effective for the credit union
• Can fill more than one purpose-from basic savings to credit-building
• The savings provides a risk cushion for the credit union
• Borrow and Save positively impacts the economic prospects of individual borrowers as an effective asset building tool
What Makes Borrow & Save Different
What Makes Borrow & Save Different
• Borrowers have immediate access to needed funds• Loans are not tied to the next paycheck• Keeps members out of high-cost alternative products• Fosters savings• Provides a solution for borrowers not eligible for other credit union products• Puts borrowers on a continuum toward accessing all credit unions products• Does not require major investment on the part of the credit union• Generates revenue for the credit union• Improves the economic well-being of the community
Wanda needs to consolidate bills
Utilizes Borrow & Save for paying off delinquent debt
Strengthens Credit
Qualifies for Responsible Rides Auto Ownership Program
Reliable car for work results in promotion and a raise
Savings available for insurance premium
Wanda
Borrow & Save Success Story
Eminent domain resulted in displacement from long-term rental home
Smaller medical collections and limited credit made homeownership a far-reaching goal, but VDOT providing down payment assistance
Borrow and Save issued to pay off collections, save for home purchase
Credit Score improved, qualified for Affordable Housing Loan Program
Home purchased through AHP program, received $30,000 in DPA from VDOT that could not have been accessed if renting
Sammy
Borrow & Save Success Story
Our mission is to welcome all regardless of wealth; Provide outstanding value and exceptional service;
Work with members experiencing financial challenge; And remain financially strong.
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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Net
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10 Year Assets & Net Worth Growth
Assets Net Worth
• Services to the Low Income and the Underserved
• This is not a new concern for CoVantage
– Low income does not equal dishonest or unworthy
Culture is Key
• Do people feel welcome?
• Do people feel like they are valued?
• Are people respected?
How do you measure up?
• CoVantage Net Promoter Score is 89
• Will you make a two week loan to a member for $50 and charge less than $1 in interest?
– What does it cost you to attract a new member?
– Systems and work flows are key to effectively making small loans
Load’n Go Card• The perfect solution for those who don’t want to carry or keep track
of cash, or who are not eligible for a checking account– Net set up or reload fee– No credit or poor credit? No problem!– Avoid check cashing and NSF check fees– Make purchases online or in-person (signature and PIN) with no
transaction fees– Get cash from over 28,000 Alliance One or Co-op network ATMs
nationwide without a charge– Only $2.00 per month! (No other fees for deposits or withdrawals)– Works like a prepaid debit card of credit card
• Measure and report to:– Staff
– Board
– Members
– The community
• What you are doing to serve low wealth and under served
• Became CDFI certified June 2010
• Have received two CDFI Grants
– $1.5 Million in 2011 for Rescue Refi Program
– $2 Million in 2014 for Home Buyers Program
CDFI Committee• Michelle Arrowood
• AVAIL
• Paul Grinde• Community Development Officer – CoVantage Credit Union
• Arnell Jogensen• New Cap Housing Assistance
• Renee O’Kimosh• Outreach Based Training Coordinator – College of Menominee Nation
• Linda Olson • Executive Director of United Way of Shawano County
• Tammy Stratz• Community Development – City of Wausau
• Yee Xiong• Southeast Asian Program Youth Advocate of the Women’s Community
Key Take Aways• Measure and report to staff, board, and the committee what you are doing to serve those of
low wealth and then underserved
• Culture is Key – policies alone do not get the job done
• Utilize the resources you have
• Think Efficiency – Work Flows – Streamlining
• Get along with a little help from your friends
• Serving those of low wealth and the underserved is good business
Paul E GrindeCommunity Development Officer
CoVantage Credit Union
PO Box 107
Antigo, WI 54409
715-216-8718
Serving the UnderservedExtending Branch Reach through Partnerships
Steve Zuckerman
President, Self-Help Federal Credit Union
September 24, 2015
Self-Help Overview
$6.8 Billion in financing through more than 100,000 loans to families, individuals, and organizations
Self-Help Federal CU• Chartered in 2008
• Rapid growth through mergers
• 22 Branches in CA and IL
• $600MM Assets
• 65,000 Members
• $100MM+/year community lending
Core Products – Designed to Welcome
• Alternative IDs OK
• Bilingual materials and staff
• Clear and transparent pricing
• Rigorous, but flexible, underwriting practices– FICO used, but not relied upon
– Alternative credit
– Low/no FICO can work
– Focus on Ability to Repay
Targeted Products
• Fresh Start Loan
• Dreamer Loan
• Secured Credit Card
• Just Right (small dollar)
• DACA/DAPA Project
Meeting a Need – Testing a Model
On-line Partners
Fresno
• Sacred Heart
• MEDA• My Path
• UFW
• Mexican Consulate
• UFW
• La Maestra
• MAAC
• AAAJ• Cesar Chavez
Institute• CHIRLA• COFEM• ELACC• Mexican Consulate• NEW Econ for
Women• SEIU (3 Locals)• YPI
• UFW
• Catholic Charities
• El Concilio
Trusted in the Community
Catholic Charities
Diocese of Stockton
Process Convenience
Integrated Education• Built into outreach• Talking points for
staff and partners• Financial education
two-pager• Short video• Free phone coaching
And If It Works…
