CINCINNATI – Maybe cost is the reason more credit unions aren't working with the underserved. William Herring, CEO of the Cincinnati Central Credit Union, said his institution remains committed to one of the city's most impoverished areas, even though it's costing the CU a lot of money. The $60 million credit union, which is privately insured, has maintained a branch in Cincinnati's Over-The-Rhine area since 1988, he said. While the exact figures differ each year, he said branch has never reached the break-even goals the credit union has set for it and that it costs the institution tens of thousands of dollars per year. "It's definitely true that having that branch break even has been a moving target," Herring said. The credit union works with Smart Money Community Services in the low-income branch, which is the credit union's only community chartered branch. Smart Money is an area non-profit that conducts the consumer education that Herring believes is key to helping residents improve their financial lives. The non-profit also regularly applies for grants and other support on behalf of itself and the branch, a fact that helps the enterprise keep growing, Herring acknowledged. Recently, the Pittsburgh-based PNC Bank, part of the PNC Financial Services Group, made a $100,000 non-member deposit in the credit union to support the branch at the request of Smart Money. News of the deposit garnered significant press, Herring said, some of which was unfortunately inaccurate. "A lot of the reporters don't understand the distinction between Smart Money and the credit union," he said, adding that the credit union branch was not losing money because residents there were using the branch primarily as a check cashing outlet more than anything else. "In fact, we don't actually cash many checks for the public at that branch," he said. "We thought about doing that but found that most of the residents that use the branch are more interested in membership than in just being check cashing customers," he said. There is a real proprietary feeling about the branch, that it's part of the community." Besides, Herring pointed out, the community already has a lot of check cashers. The branch fails to break even because most of its clients are poor and do not have a lot of savings or borrowing power, he explained; yet the branch regularly makes a significant number of transactions. Herring attributed a number of these to what he called "protected payees" that the branch has through its affiliation with Smart Money. Protected payees are credit union members whose judgment or living skills the city's social service agencies or courts have found to be significantly reduced. "Maybe they're homeless because they are mentally ill or maybe they're addicted," Herring said. Because of their impairment the city deposits benefits for them into the credit union through Smart Money and the non-profit administers their money in the form of a periodic allowance. "And they come to the credit union branch to get that allowance," he said. That, and similar types of transactions, withdrawals of directly deposited benefits for example, account for many of the branches estimated 160,000 yearly transactions, he explained. Herring said the branch has come relatively close to breaking even a couple of times since 1988, but that the credit union has always sought to make more products and services available at the branch, which in turn has driven up the cost. Smart Money now offers Individual Development Accounts (IDA), a revolving loan fund to give residents an alternative to payday lenders, small business micro lending and other services, in part through its relationship with the credit union. The path has not always been straightforward. In April of 2001, when rioters set fire to many of Cincinnati's lower-income areas, Smart Money and the credit union branch were not spared. The rioters stole computers from Smart Money and the credit union and the building suffered significant fire damage. But Herring, who won National Credit Union Foundation's Herb Wegner Award in 2002, said the credit union remained dedicated to the ideals of education, savings and living within one's means and offering those ideals to members from Over-The-Rhine as much as it did for the rest its members. "Doing the right thing is not always the easiest or cheapest," he said, "but it's still the right thing to do." [email protected]