NEW ORLEANS - ASI Federal Credit Union likes to consider itselfa trailblazer when it comes to serving low- income members, and nowthe $185 million CU is charting new ground with a payroll cardbeing rolled out this month. The ATM/debit-based card is beingpilot tested with a 20-employee roofing contractor-which ASIdeclined to identify-and later on perhaps this month with the700-employee St. Tammany Parish Hospital of New Orleans. Thepin-based cards, which ASI developed on its own bypassing majorpayroll card vendors, will be acceptable at ATMs as well as atgroceries, drug stores and other retail outlets. "We saw no reasonwe could not do this on our own," explained Audrey Cerise,president/CEO adding the "need is there, particularly when youconsider the problem of payday lenders." ASI, which has itsheadquarters in Harahan, a New Orleans suburb and has a membershipof 80,000, detailed plans for its proprietary payroll card at theannual Directors Conference of the Credit Union Executives Societymeeting here. "Developing products and services to meet the needsof the `unbanked' is nothing new for us," declared Vera R.Mestayer, the CU's vice president of member services, discussingthe ASI program during a breakout session at the CUES meeting. Thepayroll card, which ASI hopes eventually will be available to anyemployee of an ASI SEG that does not have a relationship with afinancial institution, represents another phase in the CU'sapproach to confronting payday lenders, said Mestayer.. Paydayfirms in the New Orleans market "hate us," she said, because ofsteps taken over the years to make ASI less accommodating to phonerequests by the firms and because of the CU's own competitive,low-fee loan package called "Stretch Plan." Under "Stretch Plan"which has a $3 a week fee, ASI offers a $200 line of credit andrequires a $101 payment on the first payday following the advance.Another $101 is due on the second payday. The payments coverprincipal and interest so the loan is paid in full after twopaydays and so the ultimate goal is reached of tiding members overuntil payday, explained Mestayer, noting the $3 membership fee isdeducted from the member's savings account. But the Stretch Planprovides an array of benefits including free money orders and afree one party traveler's check. In addition, members can increasetheir loan line to $500 if payments are made on time. They also canadvance to two higher level plans: "Asset Builder" and CreditEnhancement - both offering longer repayment schedules and higherlimits. Since ASI introduced its loan plans, growth has climbed to5,600 participating members with loans in Stretch reaching $2million with average loan balance of $350. Asset Builder has 225members with $350,000 in outstandings and Credit Enhancement Plan(CEP) has 1,900 members with $2.75 million in loans. Regarding theintroduction of the payroll card, Mestayer said many of ASI's 500SEGs would like to switch their payroll systems to direct deposit,but the "unbanked" problem prevents SEGS from doing so. Theunbanked, she said, are faced with a variety of problems "fromhaving to pay a check cashing fee each time they cash a check tohaving to hide money" and risk carrying large sums of cash whereverthey go. Hence, ASI hit on the idea of creating the payroll card.Under its plan, said Mestayer, SEG employees "do not have to bemembers of ASI to obtain the card and there is no credit checkrun." Upon receiving an ASI Payroll card, the employees' pay isdirectly deposited to the plastic which can be used at any ATM towithdraw cash as well at POS terminals that allow PIN-basedtransactions. "In this way, employers can still simplify thecompany payroll system by requiring direct deposit and no employeewill be overlooked," said Mestayer. Mestayer noted that employeesof both the roofing firm and the hospital have been "surprised tolearn that they were eligible for membership in ASI." It was alsodetermined, she said, that all former unbanked employees could beapproved for traditional savings or checking accounts at ASI,something they have "opted to open rather than remain unbanked."Members or nonmembers are eligible for the payroll card but"whenever possible, unbanked members are encouraged to forge abanking relationship with ASI," noted an ASI statement. Theissuance of the cards to the roofing firm and the hospital willalso coincide with ASI going to ACH origination making the productintroduction timely and practical, noted Mestayer. Cerise said ASIis "pretty excited" about its payroll card but it is not the firstfinancial institution in New Orleans to debut such an instrument.Hibernia Bank of New Orleans, for example, recently began debutinga payroll card, "and we decided that we may as well keep up to thecompetition," said Cerise. In her presentation, Mestayer notedASI's long history of thwarting what it saw as injurious practicesof payday lenders. For instance, ASI demanded payday firms stopcalling the CU on account references to determine account balances,insisting they must requests only by electronic means. The paydaycalls were "clogging up the phone lines" and taking up teller time,she said. Detailing the history of ASI and its 1996 switch from asingle sponsor to a low-income community development institution,Mestayer discussed the CU's participation in an array of programswhich reach out to first time homeowners and businesses. They haveincluded ASI's participation in SBA loans, IRS and VISTA programsas well as Habitat for Humanity grants through the NationalFederation of Community Development Credit Unions of which ASI is amember. In her CUES remarks, Vestayer noted the paradox of ASI'srole in NFCDCU as one of its very largest members and the internalproblems associated with refocusing as an institution to serve thepoor under NCUA capital guidelines. "We simply did not fit the moldas a typical NFCDCU credit union," she recalled, and for a time "itwas uncomfortable for the board and the staff" to trumpet its newrole as an institution which serves the poor. But those problemswere overcome when the management realized that "we can't justserve the underserved" and thus the CU has to be structured toreach out to other segments to remain profitable. "We have to serveeveryone," she said and reach out. The membership has worked outexcellently, she said. -

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