A Path To Financial Independence

Counseling and lending go hand-in-hand in Border FCU’s financial empowerment program.

Top-Level Takeaways

  • Border FCU tracks member financial wellness across multiple measures, including counseling and loans.
  • Many members who receive counseling improve their credit within a year.

Border Federal Credit Union ($147.0M, Del Rio, TX) knew it was helping people help themselves, but after more than a decade of providing financial counseling, the credit union had no easy way of proving it. Today, BFCU uses a digital dashboard that measures its efforts, which include credit-building loans tied to counseling, at improving members’ financial lives.

BFCU provides financial counseling to more than 500 people a year, nearly all of them Latino. Two-thirds of them are female heads of household and half have an annual family income of $30,000 or less.

Maria Martinez, President/CEO, Border FCU

Many of those members also participate in the credit union’s Occupational Loan program, which offers up $2,000 to borrowers who have been working for the same company for no less than three years, are now working full-time, and are earning at least $1,000 a month. The loan is currently priced at 15% with a 24-month re-payment term.

BFCU has made approximately 300 occupational loans a year for the past four years. The 307 it made in 2017 totaled $306,550.

That’s from a field of membership spanning 13 rural, low-income counties its serves from six branches, including its headquarters in Del Rio, a border town of about 45,000 residents 150 miles southwest of San Antonio.

Border FCU’s counseling department includes, from left, Diana Torres, financial counselor; Gina Perez-McNeal, director of financial education; and Monica Jaquez, financial counselor.

This is not an affluent membership. According to data from Callahan & Associates, BFCU’s average loan balance as of the first quarter of 2018 was $9,179, compared with $15,044 for all credit unions nationally and $12,287 for credit unions with $100 million to $250 million in assets. BFCU’s average share balance was $4,430, compared with $9,068 and $10,588, respectively.

“Every time we do an Occupational Loan, it allows us to run a credit report on the member,” says BFCU president and CEO Maria Martinez. “With this we’re able to provide counseling, consolidate debts, and refinance loans from other creditors.”

BFCU lenders refer would-be borrowers with poor credit to the credit union’s counseling services. There, they must earn a certificate of counseling completion before getting the first loan advance. If their credit improves, the credit union automatically approves subsequent advances. If their credit does not improve, they must compete more counseling before they can borrow more money.

To serve more members, BFCU plans to change the program name to Credit Builder Loans and open it to businesses that don’t provide direct deposit. The credit union also plans to move into short-term lending, following NCUA rules for payday lending alternatives. It already offers a Second Chance Auto Financing loan that allows borrowers with records of charge-offs and judgments to get a loan if the debts have been or are being resolved. Martinez says the credit union has made about 10 of those loans so far.

“Getting members in the door is only the first step,” Martinez adds. “With our help and members’ cooperation, we can help them gain financial independence.”

A digital dashboard at Border FCU allows the Texas cooperative to track members’ progress toward improved credit, manageable debt levels, and short- and long-term savings.

Tracking that progress toward financial independence has been an issue BFCU is now addressing through its use of the Pathways to Financial Empowerment dashboard from the National Federation of Community Development Credit Unions.

BFCU was one of the first of now 17 credit unions participating in the federation’s Pathways program. The dashboard allows the BFCU staff to see demographics, employment status, what the primary financial issues were prior to consulting, whether the member was previously banked, credit and debt impact, savings, and credit union product usage.

“We’d been offering financial counseling for almost 15 years, and when we were presented with the idea of tracking our performance we jumped on board,” Martinez says. “Prior to this, we’d been manually tracking our counseling clients.”

In its first year at BFCU, 40% of the Pathways to Financial Empowerment participants reduced their debt, and 50% of those who began counseling as “unscoreable” established credit. ContentMiddleAd

Then there are the 300 or so loans each year that generate approximately $45,000 in annual income for BFCU. They also perform relatively well in terms of delinquency. The 2017 rate for Occupational Loans was 0.32%. Overall, the credit union’s delinquency rate was 0.43% at year-end, compared with 0.91% for its asset-based peer group, and 0.81% for all U.S. credit unions, according to data from Callahan & Associates.


Border FCU
Data as of 03.31.18

HQ: Del Rio, TX
ASSETS: $147.0M
MEMBERS: 26,087
ROA: 0.86%

The ability to prove outcomes has enhanced BFCU’s ability to get more funds for lending, in this case a $776,000 federal CDFI grant it received in April to use with the Occupational Loan program.

The credit union’s first CDFI grant will mean more loans and more opportunities for counseling, along with the challenges that come with that effort.

Martinez says it’s difficult to get people to come in for financial counseling. Much of the credit union’s marketing is by word-of-mouth, and the counseling itself comes in the form of in-branch visits and then by text, email, and phone.

Most of our members would rather do counseling from the comfort of their home, Martinez says. So, we’re exploring offering video options.

The net effect is a double bottom line: more business for the credit union and a journey toward financial wellness for the member.

Once you counsel them and become loyal to them, they become loyal to you, Martinez says. It’d kind of like a nutritionist who tells you what you should eat. You know it’s true, but it’s always nice when someone pushes you


July 2, 2018

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