Building on a Strong Tradition

Mennonite Financial Federal Credit Union stays true to its long-established practices of mutual aid.

 
 

Mennonite Financial Federal Credit Union (now called Everence Federal Credit Union) uses both credit union and Mennonite means of networking to grow an institution based on long-established practices of mutual aid.

Mennonite Financial traces its roots to 1955, when it began under sponsorship by the Mennonite Publishing House of Scottdale, Pa. It expanded its FOM to Mennonites in Pennsylvania, then merged with other Mennonite credit unions in Ohio and Illinois. Mennonite Financial is now a 10,000-member; $82-million credit union operating out of Lancaster, Pa. Kent Hartzler has worked at Mennonite Financial for 10 years and been its CEO for a little more than a year.

Explain your FOM.
KH: Mennonite Financial is a faith-based credit union and also something of a contradiction. We serve a niche market that is located across all 50 states, with our charter being single common bond by association – we have no geographic boundary but serve any person in the Anabaptist community. This community is made up of Mennonites, Amish, Brethren in Christ, and related Anabaptist groups.

The Anabaptist community comprises a variety of different groups. It includes the Amish, most of whom don’t use automobiles and electricity; other Anabaptists are indistinguishable from most other Americans. We have strong values of pacifism, simple lifestyles, and mutual aid.

Mennonite Financial has eight branch offices and members in all 50 states. Except for one other small Mennonite credit union in Virginia, we are the only credit union for our denomination in the United States, though there is a thriving Mennonite credit union in Ontario. Any person in any Anabaptist congregation or organization can join our credit union.

Describe your operations and growth.
KH: We are primarily retail. Many of our members are self-employed, so we write a lot of small business loans and loans for education. But 70% of our loans are for real estate. Our potential membership is 750,000, so we have really only begun to scratch the surface when it comes to member growth. Lately we have been doubling about every four or five years. We have joined a shared branching network and CO-OP for ATMs, as well as other alliances.

How do people find out about you?
KH: First of all, through technology. We have online banking, e-Statements, electronic bill payment, and ACH capabilities. We also produce a quarterly newsletter and an annual report, both of which are mailed to all our members.

But a great deal of spreading information about Mennonite Financial is by word of mouth and through our strategic partner, Mennonite Mutual Aid. MMA is a national organization that has volunteer advocates in 1,800 congregations around the country. These volunteers serve not only as the eyes and ears for MMA in their congregations but for our credit union as well. MMA and Mennonite Financial work together to offer a full range of products to members.

Explain your relationship with MMA.
KH: The Mennonite Church established MMA as its insurance and investment arm. Now a $2-billion institution, MMA offers life insurance, health insurance, trust services, responsible investment opportunities and financial counseling. It operates out of Goshen, Indiana; Larry Miller, former CEO of Mennonite Financial, now heads up MMA.

For some time, MMA members were asking for banking services while Mennonite Financial members were requesting insurance and more investment options. One response both of us could have made was to compete with each other. Instead, MMA and Mennonite Financial decided to act cooperatively and complement each other rather than compete on products.

One way this cooperation works itself out is by sharing space – and employee costs – in various locations around the country. MMA already has good ties in many local communities. Mennonite Financial can take advantage of these ties to boost its presence and membership. It can also benefit from MMA’s considerable marketing department.

Do your members appreciate a kinship between credit union philosophy and Mennonite practice?
KH: Very much so. Mennonites have a strong culture of mutual aid and sense of community. They are quite familiar with pooling of funds and sharing resources because Mennonites have lived that way for centuries. It’s very natural for them to see the credit union as another way of helping fellow Mennonites, and it’s very natural for them to see that our cooperation with MMA is a productive one. In a 1998 survey, 70% of our members said they belonged to Mennonite Financial “because it gave them a way to put into practice their belief of caring and sharing with each other.”

Do some of your products reflect Mennonite tradition?
KH: Some certainly do, and they are well received. We have a mission rebate on our credit cards. We donate 10% of our interchange income to missions, charities or relief organizations. Since we began the program in 1995, we have donated more than $212,000 in this way.

We also write what we call congregational-secured loans; in other words the church becomes the co-signer. This might be used, for example, when a young couple in the congregation has a medical emergency.

In addition, a good deal of our loans are non-conforming. The properties, for example, might not have electricity or running water, or the conventional insurance, but be quite valuable nonetheless. For example, we loaned to a family that built its house on top of its stable – the appraiser went half crazy trying to find comps!

But we understand the plain community and the creditworthiness of its families. These are good loans, not subprime. Community banks might consider making loans like this but they would call them commercial loans. In any event, although such loans are non-conforming they are worthy loans – the default rate is close to zero. We have sold some loans to MMA and are looking at doing more to develop a secondary market for them.

Part of our mission statement reads: “Our services will reflect our members’ faith values, enabling them to demonstrate their care for each other and to improve their financial well-being.”

And, by the way, we are enjoying special loyalty from members in their 20s. In addition, our credit union is attracting members from various ethnic groups. Our Spanish-speaking member numbers are growing at a rate that has us considering producing more Spanish language brochures (we currently have one) and adding a Spanish section to our website. Ethiopians, Vietnamese and Chinese, immigrating to the United States and establishing their own congregations, are also fueling our membership growth.

Do you look to MMA for other assistance?
KH: Yes. MMA has more experience than we do in recruiting managers and counselors. They have a separate human resources department called InSource, and we will work closely with them to help us with our own staffing. InSource may also do our payroll and employee benefits work.

You network by traditional credit union means and by Mennonite ones?
KH: Quite right. We anticipate doing very well because we will use both traditional credit union networking mechanisms and Mennonite ones. It’s a strong combination. Credit union networking methods are such things as shared branching, technology, associations, and ATM cooperatives. Mennonite networking methods include organizations like MMA plus the kinship among Anabaptists in general. We’re are looking toward a bright future.

 

 

 

April 14, 2008


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