Have Credit Unions Lost Their Way?

Bill Bynum, CEO of Hope Credit Union, makes the case for focusing on America’s poorest communities every day — not just during a crisis.

 
 

Among CEOs, Bill Bynum has carved out a reputation of staying true to the credit union mission. He began his career helping to establish North Carolina-based Self Help Credit Union, a pioneer in programs targeting low-income rural communities. He moved to Mississippi in 1994 and founded Enterprise Corporation of the Delta. A year later, he organized Hope Credit Union ($367.6M, Jackson, MS).

As part of its core mission, the credit union focuses on economically distressed parts of Alabama, Arkansas, Louisiana, Mississippi, and Tennessee and is a fast-growing credit union in terms of membership and assets. HOPE — which consists of Hope Enterprise Corporation, Hope Credit Union, and the Hope Policy Institute — has generated more than $2 billion in financing benefiting 1 million people in impoverished areas.

Bill Bynum, CEO, Hope Credit Union

Bynum, 61, actively works for economic empowerment and serves on the boards of the Aspen Institute, NAACP Legal Defense Fund, Prosperity Now, and the William Winter Institute for Racial Reconciliation. He also is a member of the U.S. Partnership on Mobility from Poverty. Bynum has received numerous awards from Distinguished Alumnus of the University of North Carolina to National Entrepreneur of the Year (Ernst & Young/Kauffman Foundation), although he admits he has a soft spot for the Man of the Year Award from Morehead, a small Mississippi Delta town and home to one of HOPE’s 24 branches that serve as a lifeline to rural communities.

“Man of the Year — that was pretty cool,” Bynum says, but he’s quick to continue.“None of this is done alone, and I think that’s what makes credit unions so special. We are people working together to help others.”

With unemployment still high across the country and many people suffering financial distress, CreditUnions.com asked Bynum to share his perspectives on helping low-income communities and how other credit union CEOs can meet the challenges every day — not just during a crisis.

Hope's mission is "to strengthen communities, build assets, and improve lives in economically distressed areas of the Deep South." What's the secret to building a sustainable business around that mission?

Bill Bynum: Our organization exists to reduce the extent to which your location, your parents, your gender, and your race determine your ability to climb the economic ladder, support your family, and contribute to your local community. Financial tools and services help people grab the rung of the ladder and climb it.

CU QUICK FACTS

Hope Credit Union 
Data as of 12.31.20

HQ: Jackson, MS
ASSETS: $367.6M
MEMBERS: 36,229
BRANCHES: 24
12-MO SHARE GROWTH: 23.9%
12-MO LOAN GROWTH: 5.9%
ROA: 0.07%

Whether it’s jobs, housing, a stable community, healthcare, or a grocery store, financial resources come into play, and in many communities across the Deep South, those resources are not adequately available. You see them in prosperous neighborhoods, but in many of the communities we serve, we are the only regulated depository. Payday lenders, check cashers, and pawn shops are charging people an arm and a leg, but there are no banks or credit unions. We exist to fill those gaps.

The secret is to just show up in places where people need you. And you’ve got to listen to your members. We try to design products and services that address members’ needs. I think we do that reasonably well.

Describe your process for creating new programs to help the community. With plenty of needs but limited resources, what's your philosophy on approaching these decisions?

BB: It comes down to listening to the communities and the people we serve. Typically, when credit unions consider going into a community, they conduct surveys and ask how many people will open an account, how much will they put in the account, and what products and services they need. We need that information as well, but we approach it in a different way. It’s a strategy we call “HOPE Community Partnership.”

We engage local leaders — not only the elected officials but also the community leaders, neighborhood associations, and leaders in churches and the nonprofit community. We ask them what it will take to improve conditions in the community. We analyze job trends, economic trends, growing sectors, and housing stock, and we ask them to review the data and tell us if it is consistent with their reality. We take feedback and come up with priorities. Often, it’s big things like housing, jobs, education, and healthcare. In many communities we serve, it’s also access to grocery stores that sell healthy food.

We need to go back our roots. We should not try to out-bank banks.

Bill Bynum, CEO, Hope Credit Union

We take that information and decide what products and services we have that address those needs. We also are very fortunate to engage with policy makers, other financial institutions, and other resources to connect the dots.

What advice would you give other credit union CEOs interested in expanding programs to people in need?

BB: We need to go back our roots. We should not try to out-bank banks. We certainly have regulatory requirements, we need to be as efficient as we can be, but at the end of the day, we are financial problems solvers for the communities we serve. If we’re going to be like a bank, let’s be more like George Bailey in It’s a Wonderful Life. Too often, credit unions cream the market. We look for the lowest-hanging fruit. We look for what’s easiest, not for what’s in the best interest of the broader community.

We are also quick to say any regulation is bad. As credit unions, we choose to be regulated depository institutions. We are stewards of other people’s money. We saw during the financial crisis what can happen when regulation gets too lax. We should support smart regulation. We should support transparency. If you’re lending in the community, open your books and show how you’re lending to the whole community, not just to a small segment and making the wealth and opportunity gap wider. That means being transparent and fair in our lending. That’s something credit unions don’t do as well as we could. 

A relatively small number of credit unions take advantage of grants and supplemental capital through low-income and community development financial institution (CDFI) designations. What are they missing?

BB: I don’t understand why more credit unions don’t see the value in being credit unions — being people serving people. That’s a great business model. The more credit unions take advantage of it, the better the economy will be. It’s certainly in the best interest of the communities we serve. It has made HOPE one of the faster growing credit unions in terms of membership growth and asset growth.

Quite honestly, it also helps credit unions counter the narrative that we should be taxed and subject to the same requirements as banks. Credit unions should be happy to follow the Community Reinvestment Act. We would all have strong CRA ratings.

What's the case for doing this all of the time, not just during the pandemic or other crises?

BB: There’s a strong market case to be made if you look at the demographics. You’ve got so much wealth concentrated in a handful of people. At the other end, you’ve got 90% of the population that’s looking for solutions. That’s a large market that we should be competing for.

If we can close those opportunity gaps, we all do better, particularly as the country becomes more diverse. A McKinsey study showed that if we can close these gaps over the next eight to 10 years, it could increase U.S. GDP by 4% to 6% and add $1 trillion to $1.5 trillion to the economy. That creates opportunity for everyone.

It also stabilizes communities. We can only succeed if our communities are viable and people are productive. The division we’ve seen over the past year would be dramatically reduced if everyone had a greater ability to support their families. We shouldn’t see life in America as a zero-sum game — if one community does well, it’s at the expense of my family and my neighbors. We need to make the pie bigger for all of us, and I think we can do that by being more equitable and fair in our financial practices.

This interview has been edited and condensed.

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