Focus On Distressed Areas Help Grow Hope Community CU's Membership
JACKSON, Miss. -- Twelve years in, Hope Community Credit Union continues to be among those growing its membership the fastest, but the growth has come during a time when many of its members are still recovering from the deadliest hurricane on record.
Between Sept. 2004 and Sept. 2006, the $47 million credit union has seen its membership balloon--without the aid of a merger--234.72% to serve 9,000 members in Arkansas, Louisiana, Mississippi and now the Greater Memphis area. With just two fully-staffed branches in Mississippi and Louisiana, Hope isn't seeking membership growth by spreading itself too thin. It has been the hardship and despair brought on by Hurricane Katrina and other deadly storms that ravaged the Gulf region in 2005 that has been the latest catalyst for Hope's rapid growth, acknowledged Bill Bynum, CEO of Hope.
"We were in arguably, the most economically-distressed areas in the country. Katrina made that even more so," Bynum said. "Our mission is to serve distressed communities so it was pretty natural for us to reach out to areas hit by Katrina."
Well before Katrina, Hope linked up with the Enterprise Corporation of the Delta, a nonprofit community development organization that provides commercial financing, mortgage loans and technical assistance to support businesses, entrepreneurs, homebuyers and community development projects. Since 1994, the alliance has generated more than $150 million in financing and assisted more than 10,000 individuals in low-income communities throughout the Mid South. Bynum said one of Hope's long-time partners, the Foundation for the Mid South, along with Entergy Corp., provided $4.2 million to hurricane victims through the Power of Hope Fund. The foundation typically provides grants to institutions, but not directly to individuals, which posed a problem for many who needed financial assistance right away.
"We needed to find a way to get money into individuals' hands," Bynum recalled.
Hope set up savings accounts for people at the credit union, which also helped the CU process other financial transactions while offering protection from thieves.
"Instead of getting checks in places where there was not a lot of infrastructure [including] people living in FEMA trailers subject to getting ripped off, now they have a debit card where they can buy things in a much more secure manner," Bynum said. Hope is moving forward this year with building its presence in Greater Memphis, which Bynum said is listed among the areas with the highest bankruptcies in the country, and courting employers as select employee groups. Through its Hope Affinity Network, the credit union is not only looking at traditional employers, but also churches and other community organizations in rural, low-income, minority and underserved populations.
Bynum said Hope is not just a depository where members come to stash their money and walk away. The credit union and the Foundation for the Mid South provided immediate grant money to newly "unbanked" members and those left without access to their accounts due to Katrina. More than 2,300 people were assisted, but the surprise came when the grant money ran out.
"We weren't sure how many people would stay with the credit union but more than 80% stayed," Bynum said.
Hope also attributes its membership growth to its participation in a shared branching network with CU Service Center and more branches are expected to be added as the numbers demand and support it. The credit union's alliance with its more than 50 partners has also helped its members to bank online and access a call center.
Some in the movement say they want to reach out to the underserved and "unbanked", but behind closed doors they worry about the financial risks it could bring to the credit union. Bynum said the risks for Hope are nonexistent.
"It is more of a risk [to take] on people who have significant wealth or those who've had the financial counseling to handle a mortgage or manage debt," Bynum said. "Credit unions were founded to help provide services to those who need them. I would hope credit unions would recall their mission and who they're supposed to serve."
Indeed, Hope's portfolio has gotten stronger over the years, Bynum pointed out. To date, there have been no losses on mortgages or commercial loans thanks to "very smart underwriting." The credit union's partners offer a blitz of financial counseling programs including emphasizing that "everyone cannot afford what they want." Ninety-four percent of Hope's depositors have less than $1,500 in their accounts. The other 6% come from people around the country who want to make a difference with their return.
"We've received a lot of support from businesses, banks, credit unions and others that are happy with their returns," Bynum said.
To the risk concerns, the regulators are always there to ensure that Hope doesn't make financially perilous moves, Bynum reminded.
Meanwhile, New Orleans still has a long way to go, but some are slowly making their way back to the city. Hope will be there to help those with mortgages to rebuild and buy homes. Bynum said he's not expecting a rush of applicants just yet because construction costs to rebuild here are astronomically high. Car loans and micro business loans have proven popular lately and the credit union expects even more significant increases this year. With tax season nearing, Hope is also offering tax preparation services as it discourages members to avoid rapid refund loans, which can charge large processing fees.
"Industry wide, there are more payday lenders in Mississippi than McDonalds," Bynum said. "There are plenty of opportunities to provide services that banks won't provide. When I was a kid, my grandmother got a loan from a credit union to buy my first suit. Credit unions need to get back to their mission of helping those in need." --firstname.lastname@example.org