In areas that have long been underserved by financial institutions, opening a bank takes more than just opening the doors to the building.
The bank must be ready to address the needs of the community, such as making their services affordable and accessible.
On May 16, Carrollton Bank and St. Louis Community Credit Union announced a four-year, $800,000 collaborative agreement that will increase lending, provide greater access to affordable services, and expand financial education to underserved and low-to-moderate income St. Louis communities.
The agreement includes four commitments – to open a new Credit Union branch in an underserved community, to open a new financial learning center, to increase funds for small-dollar loan programs and to add two loan programs.
“We knew combining our resources and expertise with theirs would produce a lot more good for St. Louis’ underserved communities than anything we could do on our own,” said Carrollton Bank CEO Tom Hough.
St. Louis Community Credit Union is certified by the U.S. Treasury Department as a CDFI – a specialized financial institution that works in market niches that are underserved by traditional financial institutions.
Carrollton Bank will provide funds to help St. Louis Community open and operate its 11th branch in an underserved low-to-moderate income community later this year.
St. Louis Community has added five branches in the past five years. These new offices were needed to keep up with the roughly 1,100 new member-customers that join the credit union every month, representatives said.
“There are still many neighborhoods in the St. Louis area that do not have convenient access to local mainstream banking services,” said St. Louis Community Credit Union President & CEO Patrick Adams. “We are so pleased Carrollton Bank’s support will help us establish a branch in another underserved community inside of the urban footprint.”
According to a 2009 FDIC report, St. Louis is one of the country’s most “unbanked” cities for the African-American population.
New financial education center
Funds will also be used to help open and operate St. Louis Community’s first CU Excel Center, a financial literacy and life skills education destination point, located in Northwoods. This center will be owned and operated by the St. Louis Community CU Foundation and will offer free financial education classes and seminars to the public.
The foundation was established to offer an outlet for financial education and empowerment, as well as to help low-to-moderate income residents improve their standard of living.
“Until now, the foundation’s financial classes were held at credit union branches, local businesses or social service agency offices,” said St. Louis Community CU Foundation Director Dorothy Bell. “When we open our Northwoods CU Excel Center next month, it will be the first time we will have dedicated space to offer vital information to the community free of charge that will foster financial dignity, capability and empowerment.”
St. Louis Community and Carrollton Bank employees will teach many of these classes, with help from partner community groups.
More loan programs
Carrollton will provide a $500,000 loan fund to be used to make more small-dollar loans that include Payday Loan Alternative and Credit Builder. These loans will be originated by St. Louis Community lenders at their offices just as they are done now.
Carrollton will also offer two loan programs that are currently not offered at the St. Louis Community. Carrollton lenders will offer low-down-payment FHA home loans at all St. Louis Community offices, and commercial loans to area business owners.
While the two institutions operate under different charters that would normally pit them against each other, Hough and Adams have found that their institutions are much more similar than different.
For example, both institutions have been financially strong during the recent downturn that allowed them to add offices and personnel. Both have a penchant for innovation, exemplified by this agreement that will be the first time a St. Louis credit union and bank have partnered on a project of this magnitude. Both have a desire to make a difference, on a sustainable basis, in the communities that need it the most.
St. Louis Community Credit Union has 10 offices, 46,000-plus members and more than $220 million in assets. Carrollton Bank has nine offices and $1 billion in assets.
