The first community development credit union that the NCUA has chartered in 2010 is focused on serving the underserved in the community that many see as the home of breakfast cereal in the U.S.
Inspire Community Development Federal Credit Union is a low-income designated community development credit union located in Battle Creek, Mich. It is the first credit union the NCUA has chartered in 2010, according to the agency, and its finding its niche in a community long associated with the food industry.
Battle Creek is a community of roughly 50,000 people and has been known as the place where breakfast cereal got its start, growing out of a the menu and dietary guidelines offered by the city's Battle Creek Sanitarium, an institution founded and run for many years by John Harvey Kellogg. Although the city's connection to breakfast cereals has continued since the sanitarium's heyday in the 1860s and 1870s, Battle Creek has also experienced the growth and failure of other industries that have left it with an economically disadvantaged and financially underserved downtown, according to Jackie De Haan, CEO of Guardian Financial Services, the new credit union's chief sponsor.
"We have a very interesting community economically," De Haan explained. "We have a part of town which is very well off, where many of the executives from the cereal and other manufacturing companies live, while the downtown part of Battle Creek is really quite poor," De Haan said. "That was one reason we really saw the need for this very specific sort of credit union in town."
Victoria Reese, interim CEO at Inspire and executive director of the Kambly Living Center, a home for developmentally disabled people, agreed with Haan about the economically divided nature of the community. "We had to apply three times to get recognition as a low-income credit union," Reese said, explaining that after each attempt the organizers had worked hard to tweak their mission statements and field of membership to target the parts of the community they most wanted to target.
Inspire expects to open its doors in May 2010. Initially, the credit union plans to offer multiple kinds of savings accounts, including regular shares, club accounts, money market shares and share certificates, the credit union confirmed. It also plans to offer a variety of personal loans, including alternatives to payday lenders and rent-to-own businesses. By 2013, the credit union anticipates offering share draft accounts, youth savings accounts, vehicle loans, and line-of-credit loans, the NCUA said when it approved the charter, but Reese said she expected Inspire to offer auto loans more quickly.
"This is an encouraging development for consumers in Michigan and is the latest manifestation of the commitment of credit union leaders across the nation who are working to extend service to those in disadvantaged communities," said NCUA Chairman Debbie Matz. "In communities such as Battle Creek, the need for the kind of mainstream financial services that a credit union can provide is apparent and real, and I commend local consumers for their initiative and activism."
Reese and De Haan gave a lot of credit for the new credit union to Clifford Rosenthal, CEO of the National Federation of Community Development Credit Union. The coalition of community groups invited Rosenthal to speak to the group early in the process and to explain what a community development credit union is and how it differs from a bank, thrift or a mainstream credit union.
Rosenthal's discussion of CDCU differences and advantages made a strong impression on Tracy Miller, CEO of the $290 million Kellogg Community Credit Union. Kellogg Community was founded in 1941 and was well situated, Miller thought, to offer the services that the coalition was considering a new CDCU to offer.
"I walked in the door [to a meeting with Rosenthal] more or less opposed to the idea for a new institution," Miller recalled later. "But the more I talked with Cliff and the more I understood the unique services and approach that a CDCU offered, the more I became convinced that we needed to support this effort." Miller stressed that Kellogg could have begun to offer the mix of products and high transaction services that go with serving the financially underserved, but she came to realize the sorts of changes that the CU would have to make to its whole culture might be a less efficient way of attacking the problem.
"I came to realize that the way we are now, our look, our approach, might not appeal to someone who has had a history of economic or credit troubles," Miller said. Now her credit union, along with the Michigan Credit Union League, are helping sponsor the effort. Reese said the CDCU's clients would be the sorts of people who would surprise themselves by going into any financial institution whether a bank or a credit union. They will be the sort of people who fall into the most expensive loan rates for car loans and have very little, if any, financial education.