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Credit unions find niches

October 29, 2006 - Madison, Wisconsin

Through programs aimed at youth and immigrants, credit unions in Wisconsin are carving out a niche to serve groups that might not be highly targeted customers at other financial institutions.

At one Wisconsin credit union, for example, the average balance for new accounts is $34 -- not nearly enough to please stockholders of a for-profit bank.

But the nonprofit status of credit unions allows them to seek customers among people the industry calls financially under-served, said Brett Thompson, president and chief executive of the Wisconsin Credit Union League.

"Credit unions think about problems in different ways (from banks)," Thompson said. "It's because they don't have to answer to their quarterly earnings reports."

The state has more than 50 in-school credit unions run by students and supported by larger credit unions. Thompson said the main purpose of the in-school credit unions is to teach students the value of savings and checking accounts.

Star Credit Union, 2001 Taft St., is the nation's only youth- chartered credit union. Supported by the Great Wisconsin and Summit credit unions of Madison, Star is at the Boys & Girls Club of Dane County and has grown in less than two years to 133 members and $23,647 in assets.

"They continue to function and do quite well with an emphasis on the importance of saving," Thompson said.

A mobile Mexican consulate team visited Beloit earlier this month at the urging of that city's First Community Credit Union. The mobile consulate issued 180 passports and 500 identification cards to Mexican citizens, documents allowing them to open checking or savings accounts.

The event was so popular that many people were turned away and the mobile consulate will return next spring, said Jack Gill, the Beloit credit union's president and chief executive.

"It's part of our Hispanic initiative," Gill said. "It comes in different flavors depending on what the ethnic groups are in your area."

Other local credit union initiatives promote financial literacy and economic development.

Great Wisconsin Credit Union, 2424 Rimrock Road, has partnered with Centro Hispano to offer outreach meetings to improve financial literacy in Madison's Hispanic community.

Heartland Credit Union, 5325 High Crossing Blvd., offers low- cost, flexible financing to nonprofit organizations to promote economic development in low- and moderate-income neighborhoods while Heritage Credit Union, 1212 Huxley St., offers the Credit Wise program for members with low credit scores.

About 140 credit unions nationwide and a half-dozen in Wisconsin offer three-year adjustable rate home mortgages at 1 percentage point lower than the national average to qualified borrowers. Thompson said the University of Wisconsin Credit Union, 3500 University Ave., has made 36 loans through the program worth $5.2 million.

He said the Brewery Credit Union of Milwaukee offers a short-term loan program as an alternative to payday lenders. The Madison V.A. Employees' Credit Union, 2500 Overlook Terrace, offers loans as low as $100 to members who are in a financial bind.

"In this way, I think credit unions are the perfect answer to payday lenders," Thompson said. "Credit unions are working to educate folks to seek out the costs of these loans."

News Source

Wisconsin State Journal, Marv Balousek, Staff Writer

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