If there were a category of potential credit union members thatcould be described as beyond unbanked, those would be the peoplethat the Durham, N.C.-based Latino Community Credit Union seeks toserve.

“Many of our members have come from primarily cash-basedsocieties,” said Erika Bell, vice president of strategy andservices for Latino Community CU. “Some of them are not just suspicious ormistrustful of banks, they simply don't know them or the servicesthey provide, at all.”

Welcome to the daily challenge that the 54,000-member, $106million credit union has faced every day since it received itscharter from the state of North Carolina in 2000. “Yes, we servemany people who lacked banking services,” Bell said. “But our workis really so much more than that. It's serving people who might notunderstand that there are financial services available.”

Chartered at first as a public safety solution to the problem ofLatinos living in and around Durham from being perceived as easycrime victims (Latinos were stereotyped as carrying a lot of cashand storing cash at home), LCCU has grown into a communitydevelopment credit union powerhouse, offering not only the usualmix of transaction and remittance services that can sometimesmonopolize lower income or primarily immigrant credit unions butalso consumer loans, auto loans, credit cards, micro-business andmortgage loans through 10 branches as well as over the Internet andphone.

While LCCU has been successful on this model so far, Bell stressedthat the more important work takes place below the levels ofproduct and services, in the basic level of financial educationthat LCCU wants all of its members to receive. LCCU offers, withoutcharge, a series of workshops that cover the most basic elements ofworking with a financial institution, including topics like how tomanage a checking account and use an ATM, how to save and create abudget, how to build credit history and others.

The workshops are offered weekly to members and to the largercommunity three times a year in every branch. The CU offers them inthe early evening, after regular business hours for the convenienceof members and they are also taught off-site at English as a SecondLanguage classes.

The CU will offer new workshops in investing and insurance laterthis year and will launch an online interactive curriculum to allowfor expanded access to workshop topics. LCCU reported that morethan 13,140 participants have attended the workshops on budgetingand credit, thereby preparing them to be educated future borrowersat the credit union.

Bell explained that the CU wants to move members along thecontinuum of financial capability, from using transaction servicesto deposit accounts to consumer credit and eventually homeownership. LCCU makes the materials available in both Spanish andEnglish to ensure accessibility and help members feel comfortableand all staff is bilingual and bicultural. The staff come from 14different countries and have shared the immigrant experiencethemselves, including the challenge of learning to navigate theU.S. financial system, Bell explained.

Much of the CU's work focuses on helping its members start tomove along the financial system. Once a basic level of education isobtained, members with no credit history who make up 70% of theCU's members are able to build their credit history with a numberof different tools.

One, the Credit Builder loan, is a 24–month, share-secured loanwhich LCCU secures with the members interest-earning share account.The member makes payments on the loan for 24 months until the loanis repaid, giving the member a credit history and making the moneyin the share account available again. Other loans available with nocredit history include a $500 unsecured loan, an auto loan of$12,000 or less and a share-secured credit card.

The CU also accepts alternative credit histories, such aspayment histories on utility bills, as part of its underwriting andencourages them to put their utilities under their name in order tohave a record for alternative credit.

The CU reported that, since 2000, more than 6,000 members haveestablished credit through its Credit Builder and other securedloans, and LCCU has been recognized for its work in this area. In2006, CUNA awarded LCCU the Best Consumer Lending Program awardamong credit unions under $250 million in assets nationwide for itsexemplary work.

A similar attitude characterizes LCCU's approach to housingfinance. Most LCCU members faced barriers in getting a mortgageloan from other lenders from their brief U.S. work histories,limited credit histories and short lengths of time in theirexisting residence. But LCCU requires only 12 months of rent andemployment history and offers 90% financing without formal credithistory and does not require private mortgage insurance.

LCCU points to its extremely low levels of delinquency, with anaverage delinquency rate over 60 days of less than 2.6% throughNovember 2011, which the CU attributes to careful underwriting,personal understanding of members and the financial educationprogram.

LCCU opened another dimension in lending in 2010 when itintroduced micro-business loans to help serve members who had beenhit by the current recession. Many members faced job losses andwanted to start their own small businesses. By providing these muchneeded products, LCCU will be able to support localentrepreneurship and innovation for a population that hastraditionally been left out of the financial mainstream, the CUsaid.

In addition to the 2006 Best Consumer Lending award, LCCU haswon recognition nationally and internationally. In 2010, LCCU wonthe Community Credit Union of the Year award from CUNA for creditunions under $250 million in assets, as well as the E Pluribus UnumPrize from the Migration Policy Institute recognizing exceptionalimmigration integration initiatives. Also in 2010, LCCU won secondplace in the Dora Maxwell Award for Social Responsibility.