Cisco Malpartida Smith landed in Roswell, N.M., the world's UFO capital, not from another planet but from Florida in December 2016 when he was named president/CEO of the $9.8 million Florist Federal Credit Union.

In less than a year, he launched the credit union's digital transformation initiative by improving its website and the members' online banking experience. He also introduced mobile banking and a new mortgage product.

Smith is hoping these investments will become the foundation for an idea to grow membership by creating a white label brand that would operate under Florist FCU's national charter to serve the lesbian, gay, bisexual, transgender, queer (LGBTQ) community throughout the country. While many are familiar with the LGBT acronym, the “Q” stands for “queer or questioning.” These terms are relatively new and are believed to have come from millennials who are still questioning their sexuality and don't consider the word queer a derogatory term.

“We're hyper-small, and frankly, that's just surviving and surviving is actually already dying for a small credit union,” said Smith, who has held manager and executive positions with the $17.5 billion BECU in Tukwila, Wash., and the $1.8 billion GTE Financial Federal Credit Union in Tampa, Fla.

“We realized that we needed to be a little bit more aggressive in our growth, but we had to find a strategic method to do that,” he said. “Basically, we came up with a concept to create a white label for a credit union brand that would operate under the powerful engine of our nationally chartered credit union.”

Florist FCU serves about 960 members who live in 20 states. Chartered in 1969, it's the only credit union that serves the U.S. florist industry, which includes anyone who is a broker, distributor, wholesaler, grower, retailer, vendor or employee, and their family members.

Through the Tacoma, Wash.-based CUSO, Credit Union Strategic Planning, Smith met Phillip Endicott, president of Equality Washington in Shoreline, Wash. The non-profit group identified in 2014 that there is a big need and a largely untapped market opportunity for credit unions to provide financial services for LGBTQ persons in a safe, non-political and non-judgmental environment because legal cases, anecdotes and surveys have shown LGBTQ people still feel they are being treated unfairly and differently by regular banks.

“Cisco and I had something like a marathon four-hour phone conversation when we were first introduced to each other,” recalls Endicott. “We realized that we were exactly aligned in terms of our beliefs and our interests in wanting to help people that hadn't been helped before in a way that I think we believe an LGBTQ focused credit union can serve the community.”

Smith and Endicott are working to raise funds to support the development and operations of the new brand, and they will be seeking approval from the NCUA to expand Florist FCU membership to include associations that serve the LGBTQ community and organizations that advocate for equality issues.

“There's a couple of ways to go about the expansion of our field of membership,” Smith said. “Obviously, our technical format is associational, and so we will be looking to expand into some different associations that would cover the LGBTQ community.”

If Florist is allowed to serve the LGBTQ community through associations, Smith said Florist FCU would continue to operate as its own brand while the LGBTQ credit union would also function as a separate brand under the Florist FCU charter.

Smith explained each brand would offer financial products and services to meet the needs of their respective memberships and have their own president and other employees for marketing, product development and member engagement. While traditional products and services would be offered, the LGTBQ brand would also offer adoption loans and mortgages for same-sex couples, or transgender specialty loans for medical surgeries, procedures, voice lessons and a new wardrobe. Day-to-day back office operations such as HR, IT, accounting and other functions would support both brands.

After more details are worked out to demonstrate how this proposed white label brand model could sustain itself, Smith believes he will have a good case to make with the NCUA to allow an FOM expansion.

Richard Garabedian, an attorney with Hunton & Williams LLP in Washington, who holds more than 30 years of experience in serving credit unions, banks, savings institutions and holding companies throughout the nation, said on the face of it, Smith and Endicott might have a doable project.

“This is really a gem of an idea,” Garabedian said. “There's no monoline risk here because you are going to have people from all walks of life. So, you have a pretty diverse population to serve which diversifies your risk. So I think it has legs.”

In addition to what the NCUA would mandate to approve the FOM expansion under the Florist FCU charter, a significant amount of capital would be required as well.

Smith and Endicott have an ambitious plan to raise $350,000 by the end of this year to pay for the initial development costs that will help move their idea closer to reality. The Florist FCU board of directors that has unanimously supported Smith's concept has pledged to match the first $50,000 raised.

Smith and Endicott also said there are plans to raise funds from foundations, organizations, government and individuals to raise the capital to support the LGTBQ brand operations.

As part of their effort to raise money, Smith and Endicott were recently featured on a popular gay podcast, Queer Money, that talks about the unique financial needs and related challenges and issues of the LGTBQ community. The podcasts are produced by David Auten and John Schneider, who are personal finance authors, bloggers and speakers for DebtFreeGuys.com. They hold more than 35 years of combined experience in finance.

Auten and Schneider endorsed the credit union initiative and asked their listeners to donate because they know there is a market need for a financial institution that understands the unique financial needs of the LGTBQ community.

“Mass Mutual just did a study that showed that one of the reasons why the LGBT community says that we're not doing as well as we should be financially – despite what popular culture says we're doing – is that we're afraid that existing institutions either don't understand us or don't want to do business with us,” Schneider said. “If that's a concern of anybody in the LGBT community, Equality Credit Union would be an option for you, because those people would understand who you are and how they can best help you and your family and your unique financial needs.”

Indeed, there are approximately nine million LGBT people in the U.S. and more than 650,000 same-sex married couples. About 19% of those same-sex couples are raising children, according to the U.S. Census Bureau.

Although the LGBTQ community is becoming more accepted in mainstream society, large segments of its population continue to struggle with financial marginalization and discrimination, according to a 2015 Filene Research Report.

Because credit unions were formed to meet the needs of the underserved, the LGBT community could potentially become a boon for credit unions over the long run, the report noted.

“Awareness, language and service are key to effective LGBT outreach,” the report said. “To develop an LGBT-friendly culture, a key challenge for credit unions is to assure LGBT members that they will receive the same high-quality, personalized service that every member expects. That includes fair pricing, an equal shake in credit review, and the right product for their situation. To deliver services seamlessly, competencies on a few important details – such as mortgage paperwork for same-sex couples – can go a long way.”

However, in 29 states it is legal for financial institutions to consider sexual orientation a credit risk because they do not have laws that prohibit credit discrimination for sexual orientation and gender identity, according to the Filene report.

“The LGBT community is underserved by financial institutions as a result of credit discrimination,” according to the report. “Many LGBT people lack reliable access to credit for education, for small businesses or for mortgages. Financial needs in the face of discrimination make LGBT borrowers vulnerable to predatory lending practices.”

Research also shows LGBT Americans are more likely to be poor than non-LGBT Americans. More than 20% of LGBT persons make less than $12,000 a year compared to 17% of non-LGBT persons. Additionally, 30% of female same-sex couples earn less than $50,000 a year, about two percentage points more than opposite sex couples. Twenty-one percent of male same-sex couples earn less than $50,000 annually.

However, among people in the middle to upper-middle class, the average annual income by couple type was $128,000 for male same-sex couples, $101,000 for opposite sex couples and $98,000 for female same-sex couples.

Instant Insights /

White Label Credit Union Branding

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