Since 2008, online nonprofit support company Blackbaud has ranked St. Louis among its top 10 most generous large cities in America. The company ranks the 265 U.S. cities with a population of more than 100,000 on per capita online giving. Seattle topped the list in 2012, with Washington, DC, coming in at No. 3; Ann Arbor, MI, at No. 5; San Francisco at No. 8; and Minneapolis closing out the list at No. 10. Despite the city’s consistent tradition of charity, though, there are still many people in the greater St. Louis area in need of help.
We are woefully short of financial services in the low-to-moderate income areas of our community that are in the most need, says Mike O’Brien, SVP at St. Louis Community Credit Union ($240M, St. Louis, MO).
St. Louis has one of the largest unbanked African-American communities in the country and is considered a perennial poverty center, meaning the percentage of families in poverty has grown in each of the past three census periods. To serve the city’s vast financial needs, St. Louis Community Credit Union and Carrollton Bank formed an uncommon partnership in May of 2012. The collaboration between the cooperative and the local, family-owned institution aims to increase lending, provide greater access to affordable services, and expand financial education to underserved and low-to-moderate income St. Louis communities. It will accomplish these goals through a new credit union branch in an underserved community, a financial learning center, small-dollar loan programs, payday loan alternative and a credit builder program.
The Right Fit
St. Louis Community Credit Union is designated a community development financial institution (CDFI) by the U.S. Treasury Department. Also, the National Credit Union Administration designates it a low-to-moderate income credit union. Both of these designations support the credit union in its mission to provide affordable financial services to underserved communities.
For Carrollton Bank, the partnership with St. Louis Community complies with the its philanthropic obligations under the Community Reinvestment Act, a federal law designed to encourage commercial banks to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.
There are a lot of banks out there just looking to check a box as far as CRA, or they see it as an obligation, not as a mission, and I think Carrollton Bank looks at it differently, O’Brien says. It saw our business model, saw what we were doing out in the community, and realized that wasn’t something it could create on its own. There was a real strong foundation for a partnership.
In the partnership, St. Louis Community will provide the services and Carrollton will invest $800,000 over the four-year program.
Any funding we can get to help us serve the underserved is welcome, O’Brien says. And because the credit union is a CDFI that primary serves the areas in and around St. Louis’ urban core, the credit union is not considered a competitor of Carrollton Bank. The two institutions do not compete for the same customers, which has helped the partnership grow.
Expanding A Brick-And-Mortar Presence
The two financial institutions are a year into the program and are currently focused on two initiatives: the CU Excel Center, St. Louis Community’s financial literacy center, and the St. Louis Community branch located within Kingdom House, a local social services agency.
Although the credit union had plans to open its CU Excel Center before it formed the partnership with Carrollton Bank, the bank’s support has helped underwrite the operating costs of the center. The center is located on the outskirts of North St. Louis in a predominantly African-American neighborhood where many St. Louis Community members live. The center holds financial education seminars as well as life skills training. It hosts health fairs and offers CPR classes. It also provides information on how to start a business or prepare for a job. The center makes its community room available to local organizations for meetings. And it provides all these services at no cost to the recipients.
We’re always looking for ways to fund that operation, and Carrollton Bank is one of the main providers of that funding, O’Brien says. It has enabled us to breathe a little easier knowing we’re getting some major funding from an outside source. We don’t have to do all of this on our own.
But Carrollton’s involvement extends beyond its monetary investment. Employees from the bank also teach classes at the center.
They didn’t want to just write a check; employees wanted to actively participate in what is going on at the center, O’Brien says.
Since its opening, more than 1,100 people have attended free financial education seminars at the CU Excel Center. Including life skills training and community room usage, the center has served more than 2,000 members of the community.
Funding from Carrollton Bank has also helped St. Louis Community open a branch in Kingdom House, a social services agency in a low-to-moderate income area just south of downtown St. Louis. It’s a one-room facility that operates as a full-service branch, and its has allowed the credit union to better serve the area’s largely Hispanic residents.
Monetize While You Revitalize
Financial literacy sessions at CU Excel Center are free-of-charge. Moreover, the credit union makes it clear to attendees that it is not selling anything.
If it comes across as a sales pitch to open an account at the credit union, it’s going to hurt our credibility, O’Brien says. Rule No. 1, there are trust issues when dealing with the unbanked or under-banked. We’re careful to make sure we do everything possible to gain trust.
The credit union does, however, make interested attendees aware of its products and services, and according to O’Brien, people are opening accounts as a direct result of the seminar. St. Louis Community’s membership has grown 7.35% from first quarter 2012 to first quarter 2013, according to Callahan & Associates Peer-to-Peer Analytics.
And if an attendee is interested in a product or service St. Louis Community doesn’t offer such as FHA loans the credit union refers them to Carrollton Bank.
It has received a number of calls as a result of our classes, O’Brien says.
The collaboration is mutually beneficial, but O’Brien warns that a partnership like the one St. Louis has with Carrollton Bank might be difficult to find. This partnership works so well because both institutions are dedicated to serving the community. To find a like-minded partner, O’Brien says get out there and network.
Attend community events, go to meetings, and look beyond what’s going on in the credit union world, O’Brien says. Look at what’s going on in your community. We’ve met a lot of good partners through The United Way and other organizations in town.