A Bank Of Second Chances For SEGs In Southwest Louisiana

Chad Miller, CEO, Southwest Louisiana Credit Union, discusses his credit union's work to serve the low-income, high-risk populations left behind by mainstream financial services.

Chad Miller, CEO, Southwest Louisiana Credit Union

Chad Miller is the CEO of Southwest Louisiana Credit Union ($120.1M, Lake Charles, LA), a position he has held since October 2019.

SWLACU’s membership is primarily industrial. In the past two years, the credit union has received $1,664,000 in grants from the Community Development Financial Institutions fund.

What populations do you serve?

Chad Miller: We’re heavily industrial-based, so oil, gas, and refinery plant workers. But we also have a large gaming population. We have four casinos in our immediate area that bring in tourism dollars, especially from Texas. Alot of people here will graduate high school and enroll in the local trade school or community college, which both have done an excellent job developing trade programs for operators or technicians, welding certifications, CDL licenses, and the like.Frankly, you can get into the workforce quickly and make good money. We have a large Black population in Lake Charles, but there’s a divide in our city between north and south. From an economic empowerment perspective, the poverty lines arepretty much drawn in the sand. And with the influx of new power plants and more out-of-towners moving in, rents are going up.

What do these populations need from a financial institution?

CM: Housing and rental prices have been our biggest challenge. Plant workers are making good money, so rent has risen with that. And whereas small housing developments are creating more affordable opportunities, borrowers still have toqualify financially. We lend to lower credit scores with low down payments, and we’ve looked for ways to create affordable housing, providing mortgages for mobile homes, tiny homes, and even barndominiums, which are steel buildingsdesigned as barn structures and used as living spaces.

CU QUICK FACTS

Southwest Louisiana Credit Union
Data as of 06.30.20

HQ: Lake Charles, LA
ASSETS: $120.1M
MEMBERS: 17,180
BRANCHES: 2
12-MO SHARE GROWTH: 15.9%
12-MO LOAN GROWTH: 7.9%
ROA: 0.59%

From my perspective, SWLACU is the low-income, high-risk lender in the area. We try to be the bank of second chances that fills the void left by mainstream financial services. One of the first things we did with our CDFI grant was to create a $5,000 studentloan product for folks getting their six- to eight- week certifications. As part of that, we provide rent assistance or childcare for 12 weeks to remove a barrier for obtaining that higher education.

When did SWLACU become a CDFI? Why?

CM: We became certified in 2018. We operate with higher expenses and higher charge-off rates. We’ve always fit the mold of a CDFI-certified credit union, we just didn’t have the designation. We’re a $120 million shopnow, but we try to operate like a bigger institution. Receiving that grant funding bridges the gap a bit so we’re able to bring services to the people who really need them.

How competitive is the grant process? How do you stand out from other applicants?

CM: It’s competitive. The process on our end is still pretty tumultuous just in having to gather financial information that shows we are providing services to those who need them. We can’t just go in there and say, Welend to folks with 600 credit scores. That’s not going to get us far. They want to see what we are doing in the community, how many partners we’ve gathered, and specific plans for products we’ll use the funds for.

Applying for the CDFI designation is getting more popular, and we’re trying to encourage as many credit unions as possible to apply. We know credit unions are going to do the right thing with their grants and apply them in the community as theyshould be.

From my perspective, SWLACU is the low-income, high-risk lender in the area. We try to be the bank of second chances that fills the void for mainstream financial services.

Chad Miller, CEO, Southwest Louisiana Credit Union

Who or what is historically the aim of your community work? What challenges do you look to address? Why?

CM: Housing and education have been our main focus. Our vision statement is eliminating poverty in our community and our mission is financial empowerment for all. We try to live both of those by getting services to people who don’tcurrently have them. We call that filling the void. We think about what our communities would look like without credit unions in them. Without a financial institution of second chances, I honestly believe there would be a huge void.

How has COVID-19 changed your operations or your community work?

CM: We clean more and make sure there are not hundreds of people in a branch at any one time. We started our remote policy at the senior level back in 2017, which allowed us to work from home one day per week if we chose. From that webuilt processes and security functions that we were able to spin out to the entire organization.

Upon reopening its branches, Southwest Louisiana Credit Union’s locations put out signs reaffirming the role its front-line staff and physical locations play in the community.

We recently underwent our annual strategic planning session and the pandemic has made me even more thankful to have the CDFI certification. When times change drastically, it can take effort and cash to alter a strategic plan. Without some of our funding,we would have had to scale back and get more creative in the community, which we already had to do because we can’t be in person right now. As it is now, we’re doing events and workshops on Facebook Live and Zoom, which has been cool.But we’re ready to get back out into our community.

How has COVID-19 changed the way you think about the credit union and its mission? How have you evolved?

CM: It has made us live out our mission even more. We can do loan deferrals and skip-a-pays and not have to worry about where our next dollar will come from because we’re well-capitalized. As a CDFI, we’re built for this moment.This is why we’re here. This is why we built a strong balance sheet. We weren’t about to tighten up our underwriting standards like some banks are doing. We’re continuing to be that second chance lender in a smart way.

That’s going to be more important in the next year or two. I think we’re going to start seeing some bankruptcies and difficulties in housing. With the number of people out of work, we’ll have to be creative in how we account for lossof income because there’s a difference between being out of work and unemployed. There’s going to be another void, and without the void-fillers, the crisis might get even bigger.

Why are CDFI-certified credit unions important to the financial services landscape?

CM: In this day and age, people can access financial services through online and mobile channels. They are good and they serve a purpose. But at the same time, there needs to be convenient access as well. We recently opened a microbranchin the SWLA Center for Health Services in north Lake Charles. It’s a financial services hub for that community. I think without CDFIs, those type of services would go away and be replaced by payday lenders. If there are not CDFI-certified creditunions that are willing to pull their resources to create affordable options, there’s not going to be affordable options.

What lessons or advice do you have for credit unions considering CDFI certification?

CM: When you don’t know, you don’t know. So, don’t be scared to ask community partners for help. You can’t be scared to ask for help from your community partners because a lot of them have the same mindset as youand want to help.

Then, don’t be scared to innovate or take risks in what you develop. Ultimately, that’s what the funding is there for. The more creative you can get, the better chance you’ll have to receive the certification and, ultimately, the grantfunding.

An Update From Hurricane Laura

The interview with Chad Miller occurred before Hurricane Laura made landfall in Louisiana as a Category 4 storm on August 27. The storm has caused an estimated $8.7 billion damage in southwestern Louisiana and southeastern Texas. Here, Millerprovides an update on his credit union’s operations two weeks after landfall and offers what he’s learned about his community.

We’ve set up a temporary location at a credit union in Baton Rouge and have been able to help a lot of people remotely. We’re restoring our branches now, although one branch has been destroyed. 100% of our employees homes were affected,some minor, some major.

But what I’ve learned about our community is we’re EXTREMELY resilient. It’s amazing to see the helping hands, the optimism, and the love for our community. I can’t name all the partners from the credit union industry thathave lent a helping hand to our employees and our community, from providing us a place to set up shop to monetary donations and supply drives. It’s all been humbling. I’m blessed to be from southwest Louisiana, and I’m honoredto be in the credit union industry.

This interview has been edited and condensed.

September 30, 2020

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