Banking On the Underbanked

Hope Community Credit Union helps members maximize their potential.


In life, not everyone gets dealt a great hand of cards. Some people are born into privilege; others struggle financially. For people who have slipped through the cracks of the financial mainstream, Hope Community Credit Union (Jackson, MS, $129M) offers a distinct portfolio of products and services built to meet the needs of the underbanked.

“Our branches are located in low-income, distressed communities in places where traditional financial institutions either don’t go or have left,” says Bill Bynum, Hope’s CEO.

Through its work in these areas, Hope has put people in houses, provided them with loans to start or sustain businesses, and helped send children to school, Bynum says.

The credit union is designated as a low-income credit union, or LICU, which allows it to accept non-member deposits.

“We can receive non-member deposits, but we have very few of them,” Bynum says. Of the credit union’s $130 million in assets, 90% comes from approximately 1,000 of the credit union’s 23,800 members. The disproportion speaks directly to member demographics. The bulk of the members are low-income; the handful that are not drive deposits.

The credit union’s loan portfolio has survived the downturn well. In the second quarter 2010, 33% of borrowers for commercial loans were in low-income areas. Ninety-two percent of mortgage loans went to first-time homebuyers. The losses in mortgage lending have been minimal at only 0.3% of the portfolio.

The underbanked often turn to payday lending as a means of making ends meet, but Hope offers members an escape from the claws of that industry. The credit union’s payday loan alternative program gives members a $250 loan with an 18% interest rate cap. Once the member repays the $250, they can then get a $500 loan. The program helps members build relationships with Hope while also maintaining financial balance.

“As credit has gotten tight, as foreclosures have been increasing, people are looking for help, and we’ve been able to provide a lifeline,” Bynum says.

At Hope, it’s more about the solution than the problem. Underserved members have plenty of problems; Hope offers solutions to lessen that burden.