MORRILL, Neb. -Small-town Nebraskans are looking for credit unions to replace vanishing banks. One new credit union is open, another is climbing the regulatory mountain and a third is in the offing – all in communities with no more than a few thousand people and with no banks. "In a lot of our smaller, rural areas a lot of the banks are pulling out of town and credit unions seem to be a viable alternative," observed Scott Sullivan, president of the Nebraska Credit Union League, which is assisting the chartering efforts. Also helping to set up these new Nebraska credit unions is Charles Karpf, a former banker turned community activist. "I see (credit unions) as viable to keep financial decisions in your own community," Karpf said. "I'd like to see every county in the whole Midwest start a credit union." The strategy is to take advantage of the low-income community development credit union model to open up new opportunities for capital. "To me, the CD aspect is way underutilized," Karpf said. McPherson Community Credit Union opened in Tryon in March 2001, said manager Janelle Blake, and it now has assets of more than $800,000, 198 members and $300,000 in loans. It is the first financial institution in Tryon since the 1930s. The nearest bank today is in Stapleton, about 25 miles away. Tryon volunteers and students first tried to start a community-run grocery store, but found they couldn't run and support it. So, they tried a credit union. "Two years down the road, things are going well," Blake said. The credit union's office is in a motel room and from her office window Blake can see the abandoned bank building. Only 533 people live in McPherson County. Blake has several volunteer employees and even a student intern, one of the students who helped start the credit union. Her only financial background is the few years she worked in the student loan department at the University of Wyoming. Fortunately, the Tryon group could rely on assistance from the Nebraska Credit Union League and other credit unions in the state. "It helped a great deal that we didn't know what we were getting into," Blake said. The people of Palisades heard about the Tryon experience and sought out NCUL's Sullivan when the bank branch in their town closed. Sullivan connected them to Karpf. When Karpf held the first organizing meeting in Palisades in April, 60 of the town's 386 people showed up. His approach was to threaten with the worst case. He told them that getting a credit union off the ground would require a three-to-five-year commitment. "I tried to scare them," he said, telling the people of Palisades that starting a credit union "is a lot of work and you don't get paid for it." His dark assessment didn't deter the town. Karpf hopes were further raised after he learned that the branch bank that closed had had $5.5 million in deposits and that the community had just recently raised $100,000 for a veterans' memorial. So he told the people of Palisades that, "I don't see any reason why you couldn't start a credit union." Frank Potthoff, one of the organizers of the Palisades effort, referred questions on the credit union to Karpf. Credit union organizers started meeting weekly to keep the effort on track. In July, the group filed a charter to open a credit union in their community. Palisades has only 386 people, though its proposed field of membership, Hayes and Hitchcock counties, has 4,179 people. The charter was filed with the NCUA in July. The regulators have asked for additional information, but Karpf is confident that the credit union will open by early January and that it will have $2 million to $3 million in assets in five or six years. The former bank is donating its building and equipment. "Just about all they need is a data processing system," Karpf said. He sees an opportunity in Palisades to restore the town's aging housing and build new housing to attract people who are pulling out of Denver, 140 miles away. NCUL's Sullivan said he is hopeful that the small-town credit union movement will catch on. "It just seems that in Nebraska, anyway, there's a trend that credit union service is being highly desired by these small communities that have no other option," he said. "The financial institutions they have are leaving." He gives a lot of credit to Karpf, who came to the league, Sullivan said, "distraught" with the banking industry. "We're fortunate he's such a go-getter," he said. Karpf's family owned a bank in Morrill, in the panhandle near the Wyoming border. After he left banking four years ago, he started working to improve rural education developing several coop programs. One created a home-building cooperative, another started a student-run grocery store. As for the chances of opening other new credit unions, Sullivan said he wants to concentrate, for now, on nurturing Tryon and Palisades. "I'm sure there will be some that come up that we'll look at and if we find the right components and right mix, we'll definitely take a look at it." Next on Karpf's list is Morrill, his hometown. "Morrill had a good bank, it had been in my family for three generations," he said. The family sold the bank in the 1990s and Karpf worked for the new owners for several years before deciding he wanted to help revitalize small communities. Eventually, the bank closed its Morrill office. His goal is to get a Morrill credit union up and running and then become its manager. The biggest problem he sees for a small-town financial institution is confidentiality. He recalls that in his banking days he had to fire a woman, "because she wouldn't stop talking about bank stuff at her bridge club." -

[email protected]