Smaller Institutions Thrive Through Tight Focus

0

A gritty neighborhood in downtown Los Angeles is hardly a place where one would expect a thriving and growing financial institution.

Then again, the Unite Here Western States Regional Credit Union is literally a one-woman show: with just 411 members, $648,386 in assets and run by a lone manager.

The credit union serves Unite Here, a union that represents local garment, hotel and restaurant workers and their families. Members are primarily women, largely immigrants and ethnic minorities, who can open a savings account with as little as $6.

“These are people who don’t have much money to start an account at a bank or don’t trust or understand how the larger banks work,” said Manager Enriqueta Laird, who operates the credit union herself out of a single office at the labor organization’s headquarters. “Our goal is help those in our community united in the same cause to protect and serve union workers who are vulnerable.”

Of course, with so few members and assets, the services are limited. Checking accounts aren’t available, much less online banking or home equity lines of credit. But members can open savings accounts and get personal loans for automobiles.

Still, in an era of mammoth financial institutions which in many cases have racked up billions in losses the tiny credit union is doing just fine, squeaking out a $5,639 profit last year and actively seeking several dozen new members.

It’s also far from alone. It’s among 30 credit unions in Los Angeles County that have a membership of 1,000 or fewer people, according to the National Credit Union Administration. The credit unions usually are generations old, and run by volunteers out of businesses, churches or offices owned by groups associated with a cause or mission, such as unionized workers or non-profits.

What’s the attraction in a day when banks and larger credit unions offer far more services? It’s relatively simple.

Members are there for the basics, such as savings accounts and smaller personal loans for automobiles and home repairs all provided with a human touch.

“Smaller credit unions are very niche organizations that have a direct, intimate connection with their clients,” said Jay Johnson, executive vice president of Callahan & Associates, a credit union research firm in Washington, D.C. “They can better serve clients beyond their walking in and being an account number.”


Limited membership

Smaller credit unions catering to a specific church or business often have limited membership criteria, unlike larger institutions open to far more. Members usually can only be an employee of the business, or member of the church or organization where the credit union is based. Often, relatives of primary members can join.

The Columbus Club Federal Credit Union, operated by the San Fernando-based chapter of the Knights of Columbus, serves the Catholic service organization and is open to relatives of the chapter’s 750 members.

“We are a neighborhood organization, and know that many people that need money right now can’t qualify for loans,” said Ralph Menard, the credit union’s manager for 15 years. “So we will lend them the money if they really need it to survive.”

Like many credit unions across the nation that didn’t venture into risky home loans, the credit union is stable. It earned $4,051 last year and had assets of $7.5 million.

“It’s good business, but our purpose is to help, not make a profit,” said Menard, who managed two banks before assuming his position. “There’s loyalty and compassion on both sides.”

That loyalty is the reason Margo Mayfield spent 34 years as a member of the California Industrial Products Federal Credit Union, owned and operated by her employer, an automobile parts manufacturing plant in Santa Fe Springs.

The credit union’s office, run by co-workers who volunteered, was a shack slightly larger than a bathroom stall, she recalled.

“I became a member of the credit union when I was a poor single mother and could barely afford to put in $5 a week,” said Mayfield, who bought two cars and remodeled her kitchen with credit union loans. “I felt safe putting money in there because I trusted my company to take care of it.”

However, when the owner of the California Industrial Products plant, Illinois Tool Works, decided to close the site last year, Mayfield lost her job as a senior buyer in the purchasing department and the credit union closed up a risk with credit unions closely associated with one sponsor.

Now in her late 60s, Mayfield decided to retire, and her credit union savings found a new home at Bank of America which has a few convenient locations near her residence.

“It’s just not the same,” Mayfield said. “I miss truly knowing that person behind the counter every time I walk in.”

No posts to display