NCUA Webinar: Opportunities in the Underserved Market (2/18/2015)


Kathryn Baxter: Good afternoon everyone. And welcome to our first webinar of 2015. The title
of our webinar today is Opportunities in the Underserved Markets. ” My name is Kathryn Baxter. I’m your webinar host – excuse me – I’m your webinar moderator for today. Our host today is Vanessa Lowe. Prior to turning the console over to Vanessa,
I do have a few announcements for you today. In order for you to listen to this webinar and get the most out of it, we’d like you to make sure you have your volume adjusted properly, all the way up. If you need to resize the slides at any time, drag the right bottom corner. From this site
you’ll also need to allow pop-ups. At any time during this presentation, you may feel free to ask us a question; use that ask a question feature on the left hand side of your console. As a matter of fact, we’d appreciate it if you’d ask us questions throughout the webcast. Don’t wait until the
last part of the webcast. And we’ll also ask you to – if you have a question for the individual who is speaking, please include their name in your question. And also stay on the line once we get to the end of our webinar because we do have a survey that we’d like to push out to you. As
always, our webcasts are closed-captioned for on demand viewing in approximately three weeks. As I mentioned, we have a very interesting webcast for you today. And Vanessa Lowe, who is our host, is going to talk to you about opportunities in the underserved communities. So, without further
adieu, I’m going to turn the console over to Vanessa. Vanessa? Vanessa Lowe: Thank you so much, Kathryn, and I am very excited today about our presenters, about this topic. As you know, we’ve been doing a webinar a month for about the last two years. And I would say that this is a continuation of some of the things that I’ve been focused
on on my webinars. We started with talking about the low income designation and how that happened. And then we started focusing on products and services for the underserved market. And we’ve had a couple of different themes like that. And so today we’re continuing on that theme with two amazing and wonderful guest speakers, actually three, from two different
organizations to talk about opportunities in the underserved market. But let me start with our usual disclaimer. This webinar is offered for informational and educational purposes only. NCUA does not and is not endorsing any particular credit union, vendor, or their employees, products, or services. All right,
we’re going to move to the next slide and we’re going to get started. There we go. Let’s talk about what you’re going to hear today. You’re not going to hear much from me actually. We’ve got our two speakers who are going to be talking a lot. And our first speaker, Miriam De Dios, is going to be talking about the underbanked and unbanked
report findings. There are two reports that recently came out in the last couple of years and there is some really interesting stuff in there about the market size and profiles of the underbanked and generally underserved markets, so she’ll be talking about that. She’ll go through what’s called a trajectory of products for that market. And then she’s going to cover a couple of upcoming
events. So, she’ll be doing the first part. And then we have a case study which we often have. We find it really helpful. We hope you find it helpful to hear from an actual credit union about their experience and Lower Valley Credit Union is our guest today for the case study. And we have two people from that organization who are going to talk. The reason they came
up for me was I saw that they were featured in an article in the CU Times in December and it was about how they were offering citizen workshops for their membership and potential memberships. And I said, well, that sounds like they are definitely serving the underserved. So, I reached out and they were really great about partnering with us and telling their
story. They’ll talk about that particular program and other programs and generally their secrets to success. The, of course, the last half hour as is usually the format will be pure Q&A. As Kathryn said, please submit your questions at any time. We welcome them. We may cover a couple as we go through, but generally speaking we’re going to leave your questions for the last
half hour. But please, please submit. All right, I’m going to keep going through because we’ve got so much to cover. We like to put some faces to the voices you hear. So, the voice you’re hearing right now is that woman on the screen. Her name is Vanessa Lowe. And I’ve been with the NCUA for about seven years now and before this I was with the US Treasury’s
Community Development Financial Institutions Fund. And I work as an economic development specialist providing training and consultation to credit unions. All right, we’re going to hear from the other voices now. Miriam? Miriam De Dios: Hello everyone. I’m Miriam De Dios, CEO of Coopera. I am based here in Des Moines, Iowa. I have been with the
company since it was founded nearly eight years ago. And our focus is on helping credit unions across the country reach and serve the Hispanic market. Thank you for joining us today. Vanessa Lowe: Thank you, Miriam. And let’s hear from the folks from Lower Valley. Suzy Fonseca: Welcome everyone. My name is Suzy Fonseca and I’m the President and CEO
of Lower Valley Credit Union here in Sunnyside, Washington. I’ve been with the credit union for about 17 years now. And like many of us on the call, I started as a – you probably guessed it, as a teller. Like many of you, though, we’re extremely passionate about our work and we’re certainly grateful for you to be joining us here today. We know that small credit unions
are very unpredictable as far as our time constraints, so we appreciate your time that you dedicated to this webinar. And we hope that hopefully you can get some food for thought out of our case study. I also have with me Josh Beck. Josh is my Executive Vice President and CEO – or CFO, I’m sorry – here at Lower Valley Credit Union. Josh? Josh
Beck: And I’ve been with the credit union just over three years. Definitely very excited to tell you about what we do here at LVCU a little bit later. Vanessa Lowe: Great. Thank you so much. All right, let me talk about the certificate a little bit. On most of our webinars now what we’re trying to do is offer the
attendees a certificate to essentially prove that you have completed what we’ll call a course almost. We’re trying to develop a body of training material for you. And so the requirements for getting the certificate is you have to complete the full webinar and answer poll questions. I think you have to answer three out of four of the poll questions.
And then there is a quiz at the end. If you hang in there beyond the full hour of presentation and then answer 12 out of the 15 quiz questions correct, then you can download the certificate. This is really helpful as you build your body of material that you want maybe new staff or new board members to go through in order to get them up to speed on what’s involved in
being involved with your credit union. I’m going to turn it back to Kathryn for a moment because I think she has an announcement. Kathryn Baxter: Thank you, Vanessa. I overlooked making one particular announcement to our audience. There is a green image at the bottom of your screen. It looks like a folder. If you click on that
folder you should be able to download this presentation. There are also two – well, magenta sort of looking folders and those are the areas where you will find the quiz and how you’re progressing with regard to the poll questions. So, we’ll go into that. Vanessa will talk about that just before we
get to it, but I wanted everyone to make sure that if they want to download the presentation, that they go through that green folder at the bottom of your screen. Click on that and you can download this file. Vanessa Lowe: Thanks so much, Kathryn. As you see on your screen now, we have our very first poll question. And
this one is always in here. What size is your credit union? And this is asset size. Please click one of the buttons to tell us. I’m going to try to refresh. And let’s go ahead and move forward and
see what our results are. Okay, all right, we’ve got some results. I’m having a little trouble putting them on the screen, though, so can you do that for me, Kathryn. That would be great. Kathryn Baxter: Are you ready for the
results? Vanessa Lowe: We are ready for the results. Absolutely. All right, the largest grouping is the greater than $10 million but less than $50 million. That’s our usual sweet spot for these webinar, but we welcome all the others, including those who are – we even have some at greater than $250 million. So, welcome everybody. I hope you get something out of this.
I’m going to continue moving forward and turn it over to Miriam of Coopera. Miriam De Dios: All right. Well, thank you, Vanessa, this is such an important topic for credit unions and I’m excited to delve into how your credit union can better serve the underserved community. Now, this is a topic that’s near and dear
to my heart as a Mexican immigrant that grew up in an unbanked household for awhile. I certainly can empathize and sympathize with this consumer segment. And I’m really excited to talk to you about how you can certainly make an impact in the lives of consumers. Now, for today’s
webinar I’d like to cover the following agenda, starting with a brief introduction of Coopera. Then I’d like to share some demographic information about the underserved. I’d like to talk through a proven approach to reaching underserved markets. And then I’d like to share some insight into
relevant products for the market, while wrapping up toward the end on some upcoming events and some resources for you to take advantage of. All right. Get our slides coordinated there. I apologize. Well, at Coopera we seek to connect credit unions with the Hispanic market
and thus connect the Hispanic market with dignified financial services through credit unions. We were founded by Warren Morrow, who was a visionary in the credit union movement and the Hispanic community. And we continue with that mission that was initiated upon our founding today. We are part
of the credit union family and we’re actually owned by the Iowa Credit Union League. We’re also an exclusive alliance partner with the Credit Union National Association. As part of the Iowa Credit Union League, you might be familiar with some of our sister organizations whom we
collaborate with quite a bit. And these organizations include The Members Group, TMG Financial Services, and PolicyWorks, who provide a number of products and services in a variety of areas that span payments to regulatory work to advocacy
group work all across the country and obviously with credit unions here in the state of Iowa. Well, the term underserved really encompasses multiple groups. And I wanted to break down that term into two specific groups: the unbanked and the underbanked. And you’ll hear
me use these terms quite a bit. When I refer to the unbanked I’m talking about consumers who today do not have a traditional financial institution relationship, meaning they do not have a savings or a checking account or other products and services at a traditional financial institution. The underbanked are
consumers with potentially a savings account or a checking account at a traditional financial institution, however, they are still largely using what are called alternative financial services or AFS services which you’ll hear me talk about. And we’ll go into what some of those alternative financial services
are. Now, this is terminology that’s used by the FDIC and other research groups. And, in fact, the FDIC has done extensive research on underserved households and so I will be referring to some of their work, in particular a recent study that was conducted in 2013 that
spanned across the US and looked at particular characteristics of unbanked and underbanked households. And the major finding of this study is really how underserved US consumers are with one in four households either being unbanked or underbanked. And when you look at the numbers, that’s
nearly 70 million adult consumers. Now, more tend to be underbanked than truly unbanked, with one in five households being underbanked across the country. What’s equally astounding is that one in four US households have used an alternative financial services within the last
year of this study. And those alternative financial services you might be familiar with and they include locations like check cashing outlets, rent-to-own shops, payday lenders amongst other providers who tend to provide convenient financial
services at unfortunately high prices for our consumer segment. Now, most unbanked consumers tend to be concentrated in the southern part of the country, as well as the west. And there is representation all across the country, but this is really where a lot of the concentration
is. When we look at underbanked households, they tend to be concentrated in the south as well, but a second top region is the Midwest. And so that gives you an idea of where these households are in relation to where your credit union might be. However,
this market is, again, all across the US. The next couple of slides go together and review the top reasons why households are unbanked. With the most common reason being that people feel they don’t have enough money to
keep an account, or to meet a minimum balance requirement. Now, other reasons point to mistrust of financial institutions, high fees, inconvenience among other reasons. However, it is important to note that top reason,
which is very common across all households. Now, of note is how disproportionately underserved immigrants and in particular non-Asian minorities are. When we look at the Hispanic market specifically, about one out of two
Hispanic households are underserved. And underserved encompassing both unbanked and underbanked. And while the percent of unbanked Hispanic households has decreased since the FDIC did their last study from 20.1% to 17.9%, it’s still a very big issue. And I do like to think that
the main reason why that percentage decreased is because of the great work that credit unions are doing. However, there is definitely more work that needs to be done. The reasons why Hispanics are unbanked is even more nuanced than the general underserved
population, because you also have a large immigrant market and so a common barrier to account ownership is really related to identification requirements as well as credit history and overall banking history problems. And when we look specifically
at Spanish speaking immigrant consumers, the account opening requirements are really the main reason people fight for not having an account. And, honestly, that shouldn’t be the case because financial institutions, including credit unions, can serve foreign nationals and certainly can accept alternative
forms of identification to provide service to these individuals. Now, in addition to minorities and immigrants, single mother households are also very vulnerable and when we talk about financial inclusion this is a group we should also be including as well as other ethnic
groups. And nearly one out of two households across the country that are single mother households are also underserved. The largest unbanked and underbanked rates are really found with black, Hispanic, and American Indian demographics as you can see here, some very large
percentages of unbanked and underbanked. And the reasons why folks in these particular ethnic categories tend to be unbanked and underbanked tend to be nuanced as I mentioned with the Hispanic market. So, if these consumers aren’t using credit unions, where are they going? And, you guessed
it, they’re using Walmart, ACE Cash Express, H&R Block, Aaron’s Rent-to-Own, and you could probably fill in the blank with additional alternative financial service providers around your branches and in your field of membership. And unfortunately the AFS industry is a multi-billion
dollar industry charging very high fees that shouldn’t be the case because these are all products and services that, again, your credit unions can be providing. Now, underserved consumers tend to use more of the transaction alternative financial services because they
tend to be less complicated than the credit services. And an example of the transaction based service would be something like check cashing or money orders, as compared to a credit service which would be something like a payday loan or another buy-here-pay-here loan.
And what we’re finding is that – and actually what the FDIC found is that those individuals relying on some of these alternative financial services are really using them truly as an alternative to a savings or a checking account. One thing to note about credit services is that they also tend
to require a checking account which might add an additional barrier for somebody to use those services. Now, there’s been a lot of buzz around prepaid cards lately and this is a highly used product by the underserved where one in four unbanked households uses a prepaid card.
And you can see, no, next slide here so that you can actually see that. As you can see here, the main uses for that prepaid card tend to be, again, every day uses really for a savings or a checking account, paying every day purchases, paying bills, receiving payments,
and using the protection given by a Visa or a MasterCard on that prepaid card to put the money in a safe place. Again, all things that a traditional account can really offer an individual. Now, there really is a significant drop-off in usage of alternative
financial services when you compare the unbanked with banked consumers, which is what this chart is showing. With our increased attention on technology and access to services via the internet and mobile, it is important to note that black and Hispanic
households that are unbanked and underbanked tend to have significantly less access to the Internet and definitely there is a relationship with them using online banking or their lack of using online banking as a primary banking method. Now, on the flip
side, when we do look at mobile access, you can see that while unbanked households are less likely to have a mobile or a smartphone, that likelihood does increase to have such a device with higher incomes, as well as higher education levels. And this is really
interesting with underbanked households are more likely to use mobile banking as a primary method to do their financial transactions and to access financial information. So, that’s a very positive thing as all credit unions are really looking at enhancing those services or rolling
those out for the first time. These are impressive statistics which as you can see paint a clear picture for the need of credit unions to provide financial inclusion to our underserved consumers across the country. And I’m going to tell you how to reach this segment via a proven
approach. At Coopera we advocate for a comprehensive approach in successfully reaching the Hispanic market and really any underserved and emerging market. And our approach is really rooted in two fundamental steps. The first one is building the right organizational mentality to serve the market, meaning the credit union
realizes that it’s not only the right thing to do to serve the market, to be inclusive of your field of membership, but that you also see the business case around this. These are emerging markets and there’s definitely a big need for financial services to help you further the strategic goals of the credit union. That’s really half the battle. The second step is
adapting to the market instead of forcing the market to adapt to you. And that means looking at your personnel, your products, your processes, your promotion and marketing strategies a little bit different to be relevant to the markets that you’re serving. And so to become that preferred financial institutions of choice
for your selected market, that’s really reaching that best practice stage on this chart. You have to really look at having the operational and cultural alignment to be that best practice credit union. And you can move methodically from a discovery stage, to an emerging stage, to that
best practice stage by having that right mentality, by adapting to the market, and by having strong financial education programs, and, of course, growing through that, growing your market share through that. Our approach has been proven on the Hispanic market and we do focus on that
market in particular because it is one of the largest, fastest growing, youngest, and most underserved groups in the US. If you are preparing to serve the Hispanic market, or other segments of the underserved markets, it’s important to keep these recommendations in mind.
And you’ll hear Suzy talk about some of the things that the credit union has implemented in her case study. And really it starts with knowing your market. The market is really comprised of a number of different groups and you can segment it in multiple ways, whether you’re talking about a particular ethnicity, or whether you want to
target an immigrant population, if you want to break it down by country of origin, all of these groups have different nuances and it’s important to know who is represented in your field of membership and who you want to target. You also want to build buy-in of this initiative across all levels of the organization, from top down, all the way
across to ensure that folks understand why you’re doing this and that you have their support as well to advance the strategy moving forward. You want to have a strategic plan that looks at this from a long term view. It’s not an overnight initiative most definitely. And you certainly want to track your success over time and have some
measurable goals. Within that strategic plan is when you want to identify tactics to adapt to the market, look at ways to be relevant to the market. And in particular if you’re looking at different ethnicities, you want to definitely highlight how your products and services are going to be relevant and how they meet the needs of the market, looking
at culture, and a part of culture can be language as well as other aspects of someone’s belief systems or values which you want to play into. You want to build trust with the community because this is a group of individuals that does mistrust traditional financial institutions for many reasons. They may not understand,
or they just never possibly heard of how a financial institution can benefit them, and so building trust is going to be critical. You also don’t have to do this alone. Others have done this. There are a number of resources out there and certainly we encourage you to partner and seek some of those resources. And, lastly,
you want to celebrate success along the way. This is a long term initiative and as you work through different milestones it is important to recognize that, to pause, to celebrate, and to communicate some of those successes across the organization. All right, well before we jump to some relevant products and services, I know we want to
pause for a poll, so I’m going to turn it over to Vanessa. Vanessa Lowe: Thanks so much. That was really great information. Let’s look at our second poll here. She’s going to talk about products and services and these are a couple that she might talk about. So, I’m curious to know, we’re curious to know which of these loans and payment products you
offer right now. So, this is one of those check all that apply, so click as many buttons as apply and while we’re collecting the poll I want to point out it was very interesting to see that the top alternative financial service was the buy-here-pay-here program, so I thought that was particularly interesting. Some of those findings I think, you know, it sort of hints to maybe what
kind of things you can look at offering to your membership or to the potential membership you’re trying to reach. All right. I think we’ve had enough time for the poll, so I’m going to click next and hopefully we’ll see the results. Kathryn, help me out with that showing those results please. Thank you. We’ve got quite a few who are doing the credit building loans, which is really
great. That is often such a great introductory product to help your current members and those who really need to either rebuild or establish credit for the first time. And that is definitely something that new Americans need. And then money orders. That’s definitely a fairly common product. A little bit of ITIN lending. She’ll talk more about that as we move forward.
Okay. Thank you for the responses to those polls. It’s really interesting. Miriam, back to you. Miriam De Dios: Thank you, Vanessa. All right. Well, great feedback. Now, this slide is a reminder that products are just one part of the recipe. An important one, but not the whole recipe. And so we can’t forget about the overall cultural and operational
alignment as we talk about some relevant products and services to serve the market. The next three slides break down a typical trajectory of products that we find many underserved and in particular Hispanic markets find relevant when starting a traditional financial institution relationship. Now, we start off with
basic and ancillary products because that’s what these consumers have been used to using. We talk about those alternative financial service providers, we’re talking about check chasing, we’re talking about money transfers and money orders. To some degree bill payments and prepaid cards. And here check cashing and savings are
definitely basic products. Some of the ancillary products that might be new to the credit union and that you might consider do include remittances or those money transfers, prepaid cards, individual development accounts, tax assistance via VITA sites, payday alternatives as well. And so starting off
with the basic and ancillary services is a great way to start as consumers build trust and know that there are better alternatives, they will seek more of the integration products which are going to be a little bit more complex and include your checking accounts, your credit cards, some of the credit builder
loans, as well as ITIN loans. And I noticed that with a product that some of you are offering today, for those of you that aren’t familiar with ITIN loans, it’s really a regular loan offered to an individual who has an individual taxpayer ID number, or also known as an ITIN, as opposed to a Social Security number. And so there are some nuances with offering that
product and I encourage you to explore what those are before implementing that program if you’re thinking about it. So, these are products to start to introduce really in that next phase. And then, lastly, because it’s not until later on that consumers start to build a credit history individually and also just a relationship history with
you as a credit union, that’s when the wealth building and protection products come into play. As we know, these are more complex products, like mortgages. Let me back up here. Like mortgage loans, business loans, and investment products. And certainly they require a
lot more in depth interaction and understanding in some cases. Now, when we look at all of these products together, you can see that potentially not all consumers might follow this trajectory and that’s very true. However, for the majority of cases this is what we see. For
those that are new to the US financial mainstream, you’ll want to meet them where they are today and through financial education you can help them move across these stages of products to achieve their financial goals, while at the same time not forgetting that these are going to be some keys to having successful
products. Making sure that they’re simple, you know, that you’re not including that hidden language, and you’re making the product messaging as simple as possible, that they’re transparent. Again, you know, if you’re upfront with the fees and what’s required to obtain these products and services, that they’re convenient. You want to make them
easily accessible and really these things all mimic what the alternative financial service providers are doing today You want to make sure that your products are reliable and that you’re providing quality services. And I know that credit unions have no issue with this. You want to focus on the familiarity of the products. So, focus on the aspects that everyone can relate to.
You know, sometimes when we come up with some product names it can get pretty complex and confusing. And so if you’re really talking about a checking account, then talk about that in the messaging. So, again, folks can relate to what they understand. And, of course, hone in on the value. You know, what is going to be of value for these markets for these groups you’re
trying to target the products to. Is it going to save them time? Is it going to save them money? Is it going to be convenient in some aspects? You’ll want to hone in on those particular pieces. Now, as you seek to offer savings and lending products, I do want to highlight some culturally relevant uses for loans, in
particular as this example shows for immigrants. I have gone through the immigration myself. I know it’s a costly and lengthy process. And throughout that process my family had to save and borrow from each other, friends and family, because all of this happened outside of a traditional financial institution.
And so when I say cultural relevancy, this is something that speaks to the culture of an immigrant, something that you’re going through and so highlighting the uses for your loans and savings programs for individuals that are seeking citizenship, are going through their adjustment of status to obtain their green card. Coopera and the Federation have recently
teamed up to help credit unions offer immigration loans and in particular those that are going to be affected by some of the new immigration changes. There are some new immigration programs with the Deferred Action for Childhood Arrivals and Deferred Action for Parental Accountability, DACA and DAPA. And these could be potential loans
for your credit unions to offer. And so don’t forget about that cultural relevancy piece. Now, a few best practices for credit builder loans. I see that some of you are already offering some of these. We see these to be successful features of these loans and those include having a two-step loan program to build
comfort and really to build enough time into the program to allow someone to build that credit history, starting off with the small dollar amounts, $500 to an increased amount in the second loan, up to $1,500. Requiring membership for a period of time so that, again, you’re building some loyalty with that member.
Offering financial education throughout the process, not just via a brochure or a pamphlet, but actually one-on-one as folks are going through the various stages of this. And then providing that pathway to the next product. You know, what’s after this credit builder product? Can I qualify for that auto loan and that credit card? And so
being upfront about that and discussing that will make for a good program. Now, the following issues will come up, and so the more proactive you are in addressing them, the better. And these include identification and documentation. You want to address what you will accept, especially when we’re talking about a large market being immigrants
that are underserved, unbanked, and underbanked. And so addressing what identification you accept, noting that in your materials will go a long way. As well as understanding your account opening and underwriting processes. What will you accept from a credit standpoint? How will you provide a loan to someone who has
no credit history, or very little credit history? And so incorporating that into your procedures as well as your policies overall will be tremendously helpful. Understanding the language capacity needs of your potential membership is important so that you can bring that capacity from a personnel standpoint as well as
from a communications and overall materials standpoint. And then, lastly, having culturally relevant education. So, having the information not only in the language but that it speaks to the different cultures that you’re trying to reach. If folks have an aversion to debt, you want to speak to that in the
education that you’re providing, whether it be in print materials or, again, in live sessions. All right, well before I wrap up, I do want to alert you to some resources and upcoming events. And you’ll have these in your handout so that you can refer to these as well and I’ll provide
some links of where you can access these things as well. We do have a financial inclusion campaign going on for credit unions to reach and serve immigrant markets. And you can find more information about live roundtables as well as webinars by going
to our resource page here. Let me try to get to the right one. All right. And feel free to access this information at your leisure. But this is more specific guidance around how to serve immigrant markets impacted by the recent immigration changes. And we have a lot of specific
information around how to serve the Hispanic market. So, feel free to check out these upcoming webinars that we also provide in partnership with CUNA. And then feel free to access our website to read different whitepapers, to sign up for our newsletter, so that you can stay in the know on hot topics related to serving the Hispanic market.
All right, well with that I thank you for your time and I’m going to hand it over to Vanessa here. Vanessa Lowe: Thank you so much, Miriam. Lots of great information. And there is Miriam’s contact information. We’re going to keep it moving because we want to hear from our case study. We have another poll. This is saying… here
is a list of savings and services that you might offer. Again, remembering back to her trajectory. So, we’re curious as to what’s offered here. Please press any that apply and give us some data that we can look at. All right. I want to remind you that there is a grant round that’s open. I’ll show a slide in a moment, but let’s get this poll
going. There is a grant round open and it closes on March 3. So, if you are interested – if you are a low income designated credit union and are applying for the grant, remember that the deadline is March 3. Kathryn, help me push that survey. Thank you. Kathryn Baxter: We’d also like to remind everyone to submit your questions,
please, so that we can have a nice Q&A session at the end of the presentation. Vanessa Lowe: Thank you for that. I keep forgetting to say that and we need more questions. All right, so check cashing and bill payment are pretty popular. 26% do remittances. SAFE accounts, about 6%. We talked about that on another webinar. IDAs
is 10%. That’s impressive. And tax preparation, 13%. Thank you for those results. All right, and here’s the slide about the grants program. There are two opportunities. There are student internships and training. Again, the deadline is March 3 for those low income designated credit unions. All right, handing over now to our case
study. Suzy and Josh. Suzy Fonseca: Thank you, Vanessa. Miriam and her team over at Coopera have such an amazing array of offerings. In fact, I can’t really stress the importance of having partners like Coopera and such like as a Federation and such. It’s very important, especially if a credit union is attempting to go into
a market that they’re not fully familiar with. Miriam used a phrase earlier that immediately caught my attention. In fact, she spoke about cultural alignment. And then she also mentioned cultural relevance. And I really want to expand on that phrase through our Seeds of Opportunity” case study going forward here. We want to introduce
you to not only our organizational culture, but also our view on the importance of participating in the social culture within our own communities. What you see on your screens right now is a group of young girls performing a Jarabe which is a folk dance, it’s a Mexican hat dance, during our recent Cinco de Mayo celebration that we have here annually. To
give you an idea of the magnitude of this event, our small city has a population of about 16,000. This past year the Cinco de Mayo celebration brought in about 20,000 individuals to our downtown streets. So, we’ll share a little bit more on why that’s important to us here in a short while. Just a little bit of background on Lower Valley.
Lower Valley was incorporated in 1958 as a state chartered credit union. We are currently around $90 million in assets with about 11,000 members and growing. We do have three branches in Eastern Washington State. We did build and relocate our new corporate offices and head branch this past October. The building itself was really an
opportunity for us to not only honor our deep history in our community, but also it provided us with an opportunity to highlight our cultural diversity. One of the challenges that I often hear from those seeking to serve the Hispanic market in particular is the level of hesitation and uncertainty on how to serve them and
how to – I’m putting quotes here – how to not offend the core membership while serving the underserved. ” What we have found is the level of commitment has to be established at the top, like Miriam mentioned. For example, we have strategically placed Spanish messages throughout the interior of our building with
full wall wraps and every piece of literature that we have is definitely in both languages. The art that hangs on our walls is easily recognizable as a variety of agriculture that’s throughout our entire valley. The thought behind that was so that everyone can relate to it. And we really didn’t – our new building is a complete
contrast from our older building. And we really didn’t get too much, you know, negative feedback necessarily for the core membership and I think that just that hesitation that some credit unions have when it comes to how far should I push the line. It’s actually – the way that you do it is
actually going to be pretty fine if you really think about and strategize that whole method there, the method there. Let me see this next slide. Here we have our two other branches. As you can guess, remodeling projects were also a hot topic of discussion at our
last planning retreat. We did become a low income designated back in 2012. We were also the proud recipients of the 2014 CU Times Trailblazer Award for outstanding service to the underserved. In March of 2014, we did become CDFI Certified. And this past August we received our first financial
assistance grant from the CDFI Fund of $1.65 million. We actually earmarked those funds for program development to reach the underserved Hispanic population and to help fund allowances for those types of programs. Our vision statement is [in
Spanish] or translated as of course Planting seeds of opportunity for a better tomorrow. ” This vision statement was a full staff management and board endeavor. Like Miriam said, it’s really important to create that buy-in at every single level of the
organization. But what we found also to be extremely important is that it really forced us to take an extremely hard look at what our purpose was as a credit union. We felt that the power of our message lies in the ability to be personally translated into a variety of meanings to different people. So, we have people standing in front of our history
wall where this vision statement is displayed in both languages, standing there, and really trying to relate it to their own personal story. It really just embraces our entire membership and it’s nice to see that. Our mission, we also have a member focus mission, of course, of engaging conversation, exploring
potential needs, introducing and educating members to new solutions while nurturing a member relationship, thus of course captivating loyalty. We found that talking and sharing our member stories is extremely valuable in supporting and maintaining our organizational culture. We believe in this approach so
much that we actually have created short staff interviews that are part of our new employee orientation process. The interviews are of our own staff talking about their most memorable experiences, helping the members through a difficult time and how those members are currently doing. It’s extremely powerful when you’re able to
provide a new employee or a potential new employee with those types of messages coming directly from your staff in how they’ve affected the entire membership. Following here, I am going to go ahead and hand it off to Josh who will be giving you an overview of our market. Josh? Josh Beck: Thanks Suzy. And really our market
here on the slide is synonymous with our membership and our potential membership in credit union land. I think everyone can relate to that. Here in Sunnyside and the surrounding communities our population is made up of roughly 82% members of the Hispanic population. And some
barriers that come along with having that concentration of the Hispanic demographic are culture, language, and education level. So, really I can’t stress enough the importance and the prominence of having the culture that you’re
trying to serve within the underserved community at your credit union. And Suzy definitely touched a lot of points there and Miriam as well. So, language obviously plays straight into that culture. If you don’t have the staff at your branches that speak the language of these underserved
communities, then you definitely won’t relate and you won’t gain the trust that’s needed to serve them effectively. The education level here in the surrounding communities, about 50% of our population has less than a high school education. Another 28% has just the equivalent of a high school degree. And so when
you’re delivering the messages, whether it’s in marketing materials or verbally, when members come into your branch you really have to keep that in mind and speak at an education level that they understand and can process well. Low income, about 88% of our members and
potential membership is considered low income. Some barriers to entry because of this are limited disposable income, the unemployment rate here in Sunnyside is about 13.9%. The national average is at 7.9%, so that definitely plays a role in developing products
for these individuals. And the primary industry as was alluded to earlier is agriculture, so we definitely have to keep in mind that some of the employment here is seasonal and we have to develop our products with that in mind. The next slide here shows one of our members
working in an asparagus field in the fall. And then more about our market. The unbanked percentage here in Sunnyside is about 21.5%, which is nearly triple the national average of 7.7%. So, really the impact we can have in our community is unparalleled. Obviously
there are a lot of communities like this in the United States and across the world, really. So, the opportunities for credit unions to fill this space by providing financial products that are targeted at this demographic – there’s a lot of opportunity there. Some barriers to consider when developing products
to serve these underserved communities are the pricing strategies related to these products. So, they definitely have to be something that is accessible and readily beneficial to these underserved communities. They can’t obviously be an 84-month loan at 1.99%. That’s just not a product
that’s reasonable for these underserved communities to access. The concentration of predatory lenders and buy-here-pay-here lots really across all of our surrounding communities is extremely high. And that’s really who we’re competing against. So when
creating a loan product, of course, 14.99% to some people is not desirable. But when you’re competing with 32% car loan rates, that’s really beneficial to the credit union because they’re offsetting risk, and also to the member because they’re paying about a third less
over the life of a loan. Going on to more about customized approach, and the products we have, we’ve recently developed Semillas de Oportunidad” which is a citizenship loan program. We developed that in concert with One America through a grant provided by [GCIR] Grantmakers Concerned with Immigrants and Refugees
and the Federation of Community Development Credit Unions. And we’re very proud to take part in this program and it’s definitely been a benefit to our members thus far. I know we’ve done at least 20 loans already to this underserved market and we’ve helped them on their path to gaining citizenship and their path of
naturalization here in this country. We also have a first-time buyer program that’s performing very well currently at the credit union. It’s definitely been an area of growth recently. We are offering that both in our direct and indirect lending programs which is definitely a unique approach. There’s definitely some
risks involved with that, but the opportunity there to grow market share within this underserved community, it’s just too big of an opportunity to pass up. We also have credit builder loans that start as low as $500. Starting an auto loan at $500 really gives all
sorts of opportunities to find an affordable automobile. Supporting citizenship. Here is a couple more materials. The one on the left is a flyer that went out for the event we held on December 6 here in Sunnyside at our main branch. We also have
been out in different surrounding communities such as [Pasco], and Moses Lake. There on the right there was a flyer describing the citizenship loan product. And here you’ll see some pictures from those workshops. This was here in Sunnyside at our new headquarters. And you’ll see some of the
attorneys that came in pro bono and worked with our members and individuals in the community seeking naturalization assistance. I’m going to pass it back to Suzy now. Suzy Fonseca: Thanks Josh. Some of our partners throughout the community, I’d be the first one to say that small credit unions especially have the struggle when it comes to being able
to get out of the office and out into the community. But I really can’t stress enough the value that participation in outside clubs and organizations have on our credit union business. Relationships and overall image as a player in the community is key when you’re out there. Clubs such as rotary and chamber help with community service opportunity
and project partnerships. Economic development offices help with keeping in tuned with new business coming into town. As small credit unions, being able to not only voice your opinion on the direction that the city is going to be taking on attracting new business, but also having the ability to build a strategic approach is extremely valuable.
Other partners that feed directly into our mission in particular are always of value for us, Nuestra Casa, and La Casa Hogar, both of which are focused on education and mutual empowerment of immigrant women and their families. Programs such as ESL, citizenship courses, and financial literacy sessions are all programs that we are active participants in with them.
A strong network of local partners and relationships can be extremely valuable. And here in the next couple of slides you’ll be seeing some of those partnerships that we have. Here we’re sitting with Dr. Samantha [Lemos], the Director of Nuestra Casa on the left. And, of course, we do a foster kids Christmas
on the right. Here what you’re seeing is a joining forces and having a sizable impact. We partner up with our chapter of credit unions for many years now to be able to provide school supplies to our local area school districts. So, that’s a huge project there. And these pictures, again,
just of community partners. It just really goes to show that we as small credit unions need to be our own voice and share our own story. I was the first one to kind of shy away from doing media releases, but I’m kind of coming around to the fact that no one else is going to tell our story. So, we really need to be the
ones out there pushing who we are, pushing our mission, and really introducing everybody to the credit union difference. This slide here is secrets to our success. And I just want to share these briefly. I know we’re getting a little bit tight on time here. The first one, of course, is target markets. For us it’s just really not enough to be
aware of a market. We feel that we really need to be a reflection of the market at every level of the organization. Representation is vital on the board, on executive management, and certainly on the front line staff for us. Pricing, as Josh mentioned, can be a complicated conversation, especially when that conversation is being had with regulators.
But a model that serves the underserved is certainly going to have higher risk, but also a strong pricing model is intended to offset that risk. And this is really the strongest mitigation tool out there, especially for a small credit union to be able to leverage. The next bullet there is having customized
programs that are unique to every market. And really that helps embrace the membership and build member loyalty. Building an organizational culture that nurtures and encourages education by actively promoting and providing opportunities to staff, which in turn become empowered to provide the
same type of service to the membership is also definitely a value for us. We maintain a commitment to a clear vision and mission at every level by gauging it towards every product, program, or partnership opportunity that’s presented to us. Let’s get to the next slide
here. And, of course, this is just a clip of our community during one of the events that we have here, again, another community event showing just the highest regard for family, tradition, and community. Right here you’re seeing the rite of passage that’s also known as the Quinceañera.
In our area it’s observed just about every single weekend from April to the end of November just about. Getting our hands dirty and making sure that people see us, and not only that; we’re really just providing a service to our community during these types of projects and events. Here is my last picture slide that I have. I really
just want to introduce you to Rita. Rita has been with the credit union for 28 years. She’s the girl behind the desk there. She’s also known as the rock star here at LVCU. She’s highly sought after by many members and in fact many non-members are seeking her out. Her business cards have become legendary as they get passed
down from generation to generation and over to cousins, and nieces, and nephews. The high level of trust and dignity that Rita provides is truly electric. By the way, Rita was the first LVCU Spanish speaking employee. So, you can see where that whole culture began there. So, again, I’d like to share my contact
information. Please feel free to contact myself or Josh at any time with any questions or if you want to bounce an idea off. We’d be more than happy to help with that or provide whatever insight we could at any point, we’d be more than willing. And then also I believe that is all we have here. I will now, I think
we have one last poll question, so I’ll go ahead and hand it off to Vanessa. Vanessa Lowe: Thank you so much, Suzy. And I love the Rita story. There’s actually a video clip that you sent me that I think folks can find on YouTube where it’s staff stories of their favorite sort of lending stories and Rita is in it. So, I encourage
folks to look for that. Rita has been with your organization for how long? Suzy Fonseca: For 28 years. Vanessa Lowe: 28 years. Thank you. All right, let’s get to that poll and then we’re going to move into the questions. So, now, which one of these does your credit union offer? And so this is all about citizenship support and
so do you do loans to support citizenship, do you offer those citizenship workshops like LVCU does? Do you offer any interpretation services? Or, do you offer referrals to a partner for citizenship assistance? So, we’ve got a whole new category of assistance that credit unions can participate in. Let us know those and while
you’re pushing the buttons I’m going to remind you about the certificate. You had to participate in at least three of the polls. The quiz will show up at the end you have to get I think 12 out of the 15 questions right. And pretty much all of the answers you can find in the slides. So, if you’ve downloaded the slide deck you should be able to get 100% on that quiz. All right. I think we’ve
probably got enough poll responses. Kathryn, would you show those poll results for us please? Kathryn Baxter: Here we go. Vanessa Lowe: Very curious about this. This is the first time we’ve asked about these. Loans to support citizenship, 17%. Citizenship workshops, sounds like LVCU is kind of unique in that, only 1.2%. Interpretation services, 53%. That’s impressive. I was surprised at
that. Referrals to a partner for citizenship assistance is 36%. So, that’s great. Now, we may have a selective group here who is participating on this call, but I like those responses anyway. All right, we’re going to keep it moving and there is a picture of the certificate that you will get if you meet all the requirements. Please hang in there for that
certificate. And I believe I’m going to turn it back over to Kathryn for the Q&A. Kathryn Baxter: All right. Thank you, Vanessa. So, I’d like to invite our speakers to stay on the line for our Q&A. We have some very interesting questions that we’d like to proffer at this time. If you do have – for our audience that’s still on the call, if you do have
some questions, please submit them at this particular point in time. I’m also pushing the survey out to everyone right now. And we’d appreciate it if you would respond to this particular survey while we go through our Q&A. So, I would like to find out if Miriam is still on the line. Are you still there? Miriam De Dios: I am,
yes. Kathryn Baxter: All right. Why don’t we start with you, Miriam, okay? Miriam De Dios: Great. Kathryn Baxter: Okay, so here’s a question that a credit union has, question number 11. And the credit union wants to know if Coopera has Spanish speaking forms and brochures that they
can read to truly understand the fees? Miriam De Dios: Well, great question and I believe, yes, what that’s getting to is the Spanish language materials that are simple and easy for members to understand. We have translation resources available to help you customize your
particular forms, and certainly we do have samples of other generic forms, but it comes down to what’s going to be specific to your credit union and we’re happy to help guide you through this process so that you don’t miss important documents and important materials. Kathryn
Baxter: Okay, great. So now let’s go to – this may be for Suzy or Josh. This is going to be question number 15. The credit union has a very good question. They want to know what CDFI Certified is. What does it mean? Josh Beck: CDFI Certified, a
translation of it is Community Development Financial Institution. And it is placed on you or you get certified by the Treasury Department of the US. They have the CDFI Fund. It is a division of the Treasury. And it allows you a couple
of regulatory reliefs. It allows you relief particularly in regards to member business loans and it also allows you to gain access to funding from the government and from the CDFI Fund. So, there are technical assistance grants up
to $100,000 or I want to say it might have been increased to $125,000 that you can receive yearly and then financial assistance grants up to $2 million and you can receive an aggregate of $5 million within a three-year period. That process is getting more competitive every year. Vanessa
Lowe: Can I chime in on that one? Kathryn Baxter: Absolutely. Vanessa Lowe: Thanks for that, Josh. Also, so this is Vanessa Lowe. And I used to work at the CDFI Fund. And it’s a great program for those who are already serving the underserved
and you can learn more at www. cdfifund. gov. www. cdfifund. gov. Great program. Definitely like Josh says, it’s pretty competitive to get that funding, but we, OSCUl, the Office of Small Credit Union Initiatives, has really been promoting the certification
as the first step. As a matter of fact, we offered money to help get more credit unions certified and then the next step after getting certified is applying for the fund. So, if you want more information you can go to their site or you can contact me directly at [email protected] gov. Thanks Kathryn.
Kathryn Baxter: Alrighty. Fantastic. I’m going to bounce back to Miriam and question 10 – can you go into a little bit about the criteria, Miriam, for ITIN loans? Miriam De Dios: Certainly. Yes. I know it’s a hot topic. There are a lot of questions around this
particular type of loan. And just one thing to note that really just the name implies that you’re providing a loan to an individual who doesn’t have a Social Security number, but that does have an individual taxpayer ID number. And there are certain nuances to be familiar with when
you are accepting an ITIN as that taxpayer ID number. First of all, you can accept that, so that’s one thing to note. Secondly, you’ll have to look at the documentation – the supporting documentation – that you will accept for individuals applying for that loan because they may not have the traditional
forms that you’re used to with somebody who has a Social Security number. And so aside from looking at your documentation practices, the rest of the loan is really just like anything else you offer today. What this does is just allow you to serve a community that you may not be serving today. And certainly, again,
you’ll want to understand that additional documentation and understand why somebody has an ITIN number, the process that they go through applying for an ITIN number. And also be aware of providers that help individuals obtain that ITIN number. So, if they come into the credit union and ask for that loan, they don’t have the number, you can refer them to
credible, reputable organizations that offer assistance to apply for that number. Kathryn Baxter: Okay. Vanessa? Vanessa Lowe: I’m going to add something on that because I like to do commercials when we’ve covered these things before. But on our – I believe it was November 2014 we had a webinar on growing your loan portfolio. And that was another
case study where in fact she talked quite a bit about their ITIN lending and in fact I think sort of pointed out some of the NCUA legal letters and regulations that essentially say, yes, you can lend to folks who don’t have a traditional Social Security number. So, just a little commercial for the Growing Your Loan Portfolio webinar that
has been archived at this point. Okay. Kathryn Baxter: All right. Thanks Vanessa. So, Miriam, stay on the line for a minute. As a matter of fact, I want to give the next question not only to Miriam but I’d like for Suzy and Josh to chime in on it as well. One credit union asks this question, question 14, what is an IDA account?
Miriam De Dios: Yes, and I certainly start off and Suzy and Josh, feel free to add in here. So, I mentioned in that product trajectory, an IDA is an individual development account. And these are, I mean, just awesome accounts in that they provide match savings
to individuals that meet a certain income threshold. And so if they are saving in particular for a particular asset like a home, or they want to further their education, or they want to start a small business, some IDAs allow for purchasing a first time vehicle. So, if you meet certain income guidelines,
and typically it’s for lower income individuals, you save for a period of time and it’s great when these accounts are connected at the credit union. After you’ve saved for a certain period of time, you’ve received a certain amount of financial education, then you are provided a match to your savings. And those matches can vary depending on funders and
depending on partners. But these tools have been proven to help individuals ride out of poverty in the fact that they help you build an asset. So, tremendous programs and definitely seek partners, United Way is typically a partner, as well as there are some cases where credit unions are involved in this as well. Suzy Fonseca: I
think that’s a pretty fair explanation, a very well spoken explanation. I think that covers most of it. Thank you. Kathryn Baxter: Okay, well, Suzy, since you chimed in there, let’s give you a nice question here from one of our audience. Here’s a question a credit union has for your credit union
in particular. They’d like to know how does the general community see the fact that you have bilingual messages. How does that work for you? Suzy Fonseca: You know, in the very, very beginning it wasn’t, you know, maybe even ten years ago we didn’t have – we didn’t have anything in the lobbies necessarily. We weren’t
sending any marketing material out in Spanish. It wasn’t until just a few years ago that we finally decided we’re going to go ahead and embrace this. And the membership pretty much has gone right along with it. The community that we’re in, we’re obviously 80% Hispanic, so it’s not anything foreign to them. You know, when they
drive down the road they see Siesta Foods or they see the taco wagons, or whatever, so it’s not something that all of a sudden the credit union has taken on. But, you know, we have had those calls, especially it’s more in the older demographic, our older members, some of our core depositors
have made phone calls to myself and Josh and others in the executive management team just sharing their concerns about going into the Spanish side of it. And we’ve just simply shared that’s our area. That’s our membership. And a true poll of our entire membership is 80% Hispanic. So, just explaining
that to them. But, again, during our annual meetings it’s very obvious because our older members come and attend those meetings as well. And it’s very obvious who our membership is. So, we didn’t get too much flack off of it. We still haven’t. You know, what’s funny is the colors of our building actually made more of a
conversation than our actual mailing pieces. The color of our building – the picture didn’t do it justice – but it’s very bright. It’s a very bright color, but we did that on purpose. Our thought of it was we’re hoping to resemble the agriculture that’s in our area. But a lot of people are used to maybe just
the tans and the colors that kind of fade into the background. And that’s definitely not us. So, that got more conversation than the actual dual language materials. Kathryn Baxter: Very good. Stay on the line. I have another question for you. It’s question 22 – the credit union wants to
know where they can find the unbanked and underbanked statistics for their area. As a matter of fact, both you and Miriam can probably chime in on that. Suzy Fonseca: Sure. Josh Beck: And where we located our data was from an asset poverty and liquid asset
poverty census survey. And that was published in 2014, as well as, the 2011 FDIC national survey of unbanked and underbanked households. We do have a website and it is localdata. assetsandopportunity. org. And there you can
research basically any community in America. Sunnyside (inaudible) are fairly small communities, so I’m sure if we could find us, you can find the community where you’re located at. Miriam De Dios: This is Miriam. I would echo those comments. CFSI, the Center for Financial
Services Innovation has a lot of research on the topic. And, of course, the FDIC. I know that there’s a map of the country where you can click on your state and get state information and the resource that Josh mentioned will also get you more specific drilled down information
as well. Kathryn Baxter: Okay, thank you. So, now this question again is for Suzy. The credit union wants to know, they’re concerned with BSA requirements and they want to know how you fulfill your CIP requirements. Suzy Fonseca: We actually, that’s a great question.
We actually have had some [in Spanish] and any type of government issued ID on our customer identification program policies for as long as I can remember. So, it’s something that has always been there. We have been examined, it’s been reviewed, it’s never been questioned. Kathryn Baxter:
Fantastic. Alrighty. So, here’s a question that we can direct to all of our speakers. We’ve gotten this a couple of times. A couple of credit unions want to know what a SAFE account is. Miriam De Dios: I’d be happy to explain more about that and feel free to follow up, Josh and Suzy. A
SAFE account is really just a generic term for a non-interest bearing savings account. And so this is just a savings account that typically requires an additional share, a separate share at the credit union, and it’s for individuals that don’t have a taxpayer ID number when they open that account, however, it still provides them a safe place
to put their money, just without earning interest. And the idea is to open that for them when they need it. As they get the taxpayer ID number, then moving them to that interest bearing account. Josh Beck: And, yes, to echo on that, the importance of these accounts cannot be understated. These individuals
that don’t have tax identification numbers, they’re keeping this money at home, under their mattresses, literally, where it’s definitely unsafe and not nearly as secure as deposited in a financial institution. And the options credit unions have, there
are two of them, you can either open up SAFE accounts, or you can open up interest bearing accounts. You just have to report these accounts to the IRS on a yearly basis about the dividends that were paid out to these individuals and how you are identifying them within your credit union. The reason that
a lot of credit unions don’t do that is because it is labor intensive. But- Suzy Fonseca: Well, and plus the individual is more comfortable knowing that these accounts are not necessarily going to any type of government entity. So, a SAFE account is typically kind of where they lean towards. We had a situation not that long ago where a person’s home
actually was on fire and they lost a good amount of their savings account, or their savings that they had collected. And it’s not just their savings. It’s their family savings. It’s the other generation’s savings. So, it’s a pretty large amount when you really think about it. Vanessa Lowe: This is Vanessa again. I’m going to again do a commercial because
we actually provided a link, or at least a screenshot of the FDIC guidance related to SAFE accounts. They’ve actually got quite a bit of guidance on how to start those. And I think what I’ll do is maybe I’ll try to write a little article for our focus newsletter, a little advertisement for the OSCUl newsletter. But, again, if you go to the FDIC website
and search for SAFE accounts, you’ll find a complete document all about guidance on SAFE accounts. Kathryn Baxter: Okay. Great. While we’re on SAFE accounts, another credit union wanted to know what identification do you typically collect for SAFE accounts. Suzy Fonseca: For us, it’s any government issued
identification. So, it can be the [in Spanish], it can be a passport, it can be any of those types of things. As far as establishing our field of membership because we serve the state of Washington, we just require something with an address that’s here locally, or I’m sorry,
in state. Kathryn Baxter: Okay. So, for both Miriam and Suzy, actually, for the three of you – Miriam, Suzy, and Josh – we’ve had a couple of credit unions ask for the web addresses, again, for the statistics that you collect. Do you mind
repeating those? Josh Beck: No problem. So, the address is localdata. assetsandopportunity. org.Miriam De Dios: And then the FDIC, if
you just go out to FDIC.gov you’ll see a financial economic inclusion section on their website and that’s where all, in fact, all of the stats of the survey that I mentioned in my presentation
are. And they also have that map of the country, where you can drill down by state. Kathryn Baxter: Okay, fantastic. We have question number 19. This is going to go to Suzy and Josh. The credit union wants to know for your credit builder loans, are they secured loans?
Josh Beck: We actually have two types of credit builder loans. We have unsecured loans up to $3,000 in aggregate amount, and those borrowers can have credit scores as low as zero and have absolutely no credit. We generally do not provide those loans to
individuals with historically bad credit. In those circumstances, the loan does have to be secured and is priced at a rate that is equivalent to the FICO score that is being financed. But then our secured loans, those range anywhere from $500 up
to the loan to value amount of the asset that’s being used as collateral. And we also do those loans for zero [Beacon] scores all the way – obviously these wouldn’t be established borrowers, so it’s generally zero [Beacon] scores and very challenged credit borrowers with
negative history in the past. Suzy Fonseca: And please keep in mind that there are definite safeguards in place when applying these types of programs. In our case, we have procedures such as requiring a large amount of references and verifying those references. It’s often a lot easier to contact a relative
to try to collect some money versus just a neighbor or something. And then also making sure that you know the individual, that they have employment for a set period of time before you release those funds. Kathryn Baxter: Okay, now Suzy and Josh, stay on the phone. This is a particularly
interesting question that one credit union has. It’s question 30. They’re interested in finding out of all of the things that your credit union has done in terms of programs and services, which one do you feel has had the most impact in the relationship
building process for your Hispanic members? Suzy Fonseca: That’s a great question, in fact. Let me think. I think the most social impact is our immigration citizenship loan program that we just piloted. You know, of course, that sets off an entire
family’s ability to become naturalized- Josh Beck: Citizens. Suzy Fonseca: Citizens. So, that has the greatest, I think, impact as far as social. Josh Beck: And I would have to say in contrast to that, I would say definitely our used auto program.
The majority of our membership that is afforded financial services here at LVCU does have a used auto loan. That is definitely what most of our members enter our branches for that have never seen LVCU. They’ve only heard about it. And it’s generally for
a used auto. These individuals that are obtaining financing here would receive a 32% generally, which is the max that they can be charged. And the rates they get from LVCU legitimately cost them one-third less over the life of the loan. And when you’re
considering that these individuals are only making a very limited amount of income within a year, cutting down interest payments by two-thirds really affords that individual and their family opportunities that they otherwise would not have. Suzy Fonseca: For
example, we were just having a conversation the other day. Right now it being tax season and all, the buy-here-pay-here lots are just going gangbusters on a lot of these individuals and taking their almost entire income tax returns and that a lot of these individuals use to supplement their
income throughout the year. So, it’s really unfortunate when programs like ours or other credit unions are able to provide these types of lending opportunities are not out there in the market and they have to turn to those predatory lenders. But, I mean, that’s a great question, because I mean we also
have a loan during the winter season that gets a lot of our members through when there is no agricultural work. And those are unsecured as well. So, there’s a lot of these little – you know, is that a trick question I think, maybe? Vanessa Lowe: It’s well timed. Kathryn Baxter: It was. Very much so. So, not
to leave Miriam out, how would you address that question, Miriam, about the programs and services that Coopera has that has had the most impact in relationship building with the Hispanic market? Miriam De Dios: Yes. Well, that’s a tremendous question and I would actually kind of deflect to each one of the credit unions that we work
with because every credit union is a little bit different. Every credit union’s field of membership is a little bit different. And so that creates for just an opportunity to have customized programs like Suzy and Josh’s credit union, those that really impact the lives of individuals, whether it be to help them through the time when they’re not working, or
to get them into that car. Just depending on those life situations, that’s why it’s important to know the market and to make sure – those are all examples of culturally relevant products. And so that’s really the key. Making sure that you connect and that it’s not just the product, but helping individuals through to
that next phase to help them achieve whatever their financial goals are. Kathryn Baxter: Okay, wonderful. So, now let’s get back to another question for the credit union. Suzy and Josh, another credit union wants to know what percentage of your board of directors is Hispanic
or matching the demographics of your target. This is question 33. Suzy Fonseca: We have seven board members currently and I would say probably three of the seven are either in the age demographic and/or Hispanic. Kathryn Baxter: Fantastic. Miriam De Dios: Can I add
one thing to that, Kathryn? Kathryn Baxter: Absolutely. Miriam De Dios: And this is just in general something that we have our credit unions strive for is to be. Whatever percentage of your membership is Hispanic, to have that be reflected across your staff and across your board. So, if you’re looking
for a target, start with that. And, of course, it’s easier said than done, but it can be done if you’re deliberate and you’re intentional about it. Thanks. Suzy Fonseca: Can I add just one other thing to that? Kathryn Baxter: Yes you may. Suzy Fonseca: I’m sorry. I lost my train of
thought. I will get back to you. Kathryn Baxter: Can I come back to you? Okay. All right. Now, let’s just kind of open this up a little bit more. Back to Suzy and Josh. The credit union wants to know, this is question 26, how long you have been offering the
services to the Hispanic market and how long have you had the low income designation? Josh Beck: Okay. So, we received our low income designation in December of 2012 and then our CDFI Certification in March of 2014, so just this past year.
And then the other question was the services we’ve been providing to the Hispanic market, well, it depends whether we’re speaking about formally or informally. I would say informally we’ve been serving that market as soon as Rita came on board, so about 28
years ago. I’ve heard stories, I’ve only been here about 3.5 years, but I’ve heard stories of in the past, 20 years ago, there being a line out the door because we had one teller at the time who could help a large number and a growing number of individuals within
our community that were seeking these servicesAnd then more formally we’ve been developing programs definitely since I got here and before that, making sure that all of our forms and marketing materials and everything that’s going
out to members is bilingual. And we have expanded our ITIN program for used autos and consumer lending and made that a formalized process as well. So, that’s kind of a layered process. Suzy Fonseca: I think what Josh is referring to is like many of us small credit unions,
you know, the smaller we are, of course, you know, we’ve definitely – were there just yesterday. You know, we have such a struggle when it comes to staffing and the ability to hire professionals and key people to be able to head up certain programs. And that, I think, is the biggest struggle for small credit unions, to be able to provide these types
of programs or to be able to have the oversight to these types of programs. So, I really think the value when it comes to partnerships with different organizations like Coopera or the Federation or just anyone that’s able to provide us outsourced use or outsourced services is going to be key for us small credit unions.
But going back to that question that I completely flopped, the board of directors, I think it’s important to point out though that of the remaining board of directors, we do have – they are definitely in the field where they serve the same market themselves. So, for example,
we have a realtor on our board who sells homes to this Hispanic market, so he definitely is aware of what we’re seeing. So, he, you know, although he’s an older gentlemen, of course, he’s not Hispanic himself, but he has been in the market for 30 years, so he definitely knows what we’re
talking about and knows who we’re serving, so that’s important as well. Vanessa Lowe: Thanks guys. Your responses to the question about low income designation and CDFI certification interested me because low income designation before, I think, 2012 – because I think that’s the year it got automated – you had to proactively ask
to get an analysis. So, I’m interested that you didn’t get your designation until 2012. Had you not asked for it before, or was 2012 the year that you got that letter that said, hey, you are eligible for this and you proactively took it? That’s the first question. Josh Beck: So, I could speak to that.
When I came on board in early 2012, after seeing the membership we were serving, I was pretty surprised we didn’t have our low income designation. But really I think it’s the same struggle that a lot of small credit unions face is who has the time to do all the research, conduct the research, send
it to the state, if you’re state chartered, and then get it recognized by the NCUA, or if you’re federally chartered get it recognized by the NCUA. And so it was really a staffing issue more than anything. Suzy Fonseca: Yes. We weren’t one of the fortunate ones that got a letter. We did have to go seek it. Vanessa Lowe: Okay. That’s helpful. Thank you for
that. And I guess I just want to remind everybody who is on the call, that now it is automated, so there’s not as much work. When your examiner comes in to do the full exam, you’re getting that analysis and so you should get a letter that says whether or not you’re eligible for the low income designation. So, just wanted to throw that out there. Thanks guys. Kathryn Baxter: All
right. Well, we are fresh out of time. We like to start and stop on time. And so we’re going to do that. We thank our guest speakers, Suzy, Josh, and Miriam, for their insight into this evolving information on serving our underserved communities. Thanks Vanessa for hosting. And we want to invite everyone back on the fourth
of March because we have a collaborative event with the Small Business Administration and the title of this webcast is going to be Balancing Member Business Loan Portfolios with SBA Guarantees. You won’t want to miss this. We enjoyed having
you all on the call. Join us again March the 4th. Have a wonderful afternoon and a great week.

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