Probably 10 local credit unions turned down an opportunity to merge with Guadalupan Credit Union of St. Louis, Missouri. And who could blame them? It was a 457-member, parish credit union with only $320,000 in total assets operating out of the basement of an elementary school in a “not-so-upscale” neighborhood. Almost 40% of the membership was Hispanic.
Some credit unions thought that the kind of merger one with Guadalupan held in prospect are “a dime a dozen.” This one was too small. It wasn’t worth the trouble.
Then along came Gateway Metro, a $170 million, 25,000 member community credit union headquartered in downtown St. Louis. After extensive research, Gateway Metro decided to merge Guadalupan into its membership.
We didn’t simply look at the numbers, we focused on the potential.
Gateway Metro already had the region within its charter, so we weren’t picking up a new field of membership. What Gateway Metro did pick up was a niche. We saw the merger as a way to re-vitalize Guadalupan’s field of membership and help the combined credit unions in the process.
Gateway Metro noted that the average age of credit union members in the United States is 47 years. At Gateway Metro, the average age is 43. For Missourians, it’s 37. By comparison, the average age of Latinos in the United States is 27.
An Abnormal Merger
Too often, larger credit unions look at mergers as either charity to a smaller credit union or a grand strategic statement about two large credit unions uniting for economy-of-scale reasons. Both are viable strategies. But what about a merger in which the larger credit union keeps the presence of the smaller one, enhances its service offerings and benefits from its legacy reputation? Apparently, this is a little abnormal.
Gateway Metro had a two-fold strategy to maintain the identity of the merged credit union, enhance its image and build business:
1. Become the credit union for the St. Louis Latino community; and
2. Make the branch in the basement of the elementary school accessible to the school’s students and their parents.
We learned two key facts during our merger research. First, there was no larger credit union serving the growing Latino population in the St. Louis area – we could be that credit union. Second, there were 200 students (and their parents) in the same building as the small credit union who did not know they were eligible to join it.
Think Globally, Act Locally
Generally speaking, Latino immigrants do not trust banks. They also view a large credit union as just another bank. At the same time, Our Lady of Guadalupe Parish is a “Hispanic Mission” with Spanish-language masses, Hispanic outreach programs and bi-lingual priests and volunteers. Gateway Metro reasoned that if Gateway Metro were perceived as part of the parish, the Latino community would be more likely to trust them – a financial entity within the parish, not just another financial institution on the street.
Once the merger was complete, the priorities for Gateway Metro were: 1) upgrade the look of the parish credit union office; 2) put together a package of services specifically designed for the Hispanic market; and 3) communicate with the Hispanic members of the parish.
You’ve heard the old story about how “our credit union started in a closet” – well, this credit union office was a closet. We did our best to update the office with new paint, curtains, signage, flooring and teller counter.
After speaking to credit unions around the country, Gateway Metro put together the second of its initial priorities: a package of financial services for the Hispanic market.
• A Directo A Mexico ACH “Wire” service - a very inexpensive Federal Reserve product for transferring funds to Mexican banks and credit unions.
• Stored-value VISA cards – making plastic card services available in a safe and inexpensive way.
• A consumer-friendly pay-day loan alternative – helping members stay out of the predatory lending trap.
• Spanish-speaking employees – two bi-lingual employees were hired to help communicate the benefits of credit union services.
• Spanish language website and ATMs – a Spanish language choice is offered at all Gateway Metro ATMs and on the credit union website. In addition, there is a link from the parish website to Gateway Metro’s website
• Promote Accel Member Financial Counseling – a budgeting and financial resource product on-line or over-the-phone with bi-lingual financial counselors.
• SAFE Accounts – a savings account for people without a tax ID number (designed after Charlotte Metro Credit Union’s successful program)
Our third priority was to communicate effectively with the Latino parish members. This is still a work in process. We have had mailings in English and Spanish. We have been involved in the Hispanic Festival at the parish. We have also conducted a very creative financial literacy program for Latino kids in Summer Camp at the parish. But the most effective method of communication has been having special financial programs after Spanish-language Masses on Sundays. The credit union has held after-Mass sessions on home buying, wiring funds to Mexico, and the advantages of membership.
School officials and parents have been very supportive of Gateway Metro’s presence in the school. The credit union has conducted financial literacy classes, plus an all-school assembly on the same topic.
Gateway Metro contributes the first $5 into each student’s account. It has expanded the in-school branch hours. Student volunteers staff the branch along with a Gateway Metro paid employee. In fact, the credit union boasts that it is the only in-school branch with student volunteers in the state.
Parents seem to be equally excited about both the financial services offered to their kids and the student-volunteer opportunities of the branch. We have had parents come into our school branch and open accounts for themselves as well as their children. Because of our affiliation with the parish, we feel strongly that these kids, and probably their parents, will be members for life.
Our Lady of Guadalupe membership has already increased by more than 10 percent. With an aging population of its own membership, Gateway Metro reasons that the merger which will help it over the long run.
Future plans include trying to place a drive-up ATM on the church property or at a nearby Hispanic grocery store. The priest and school principal have been supportive of having an ATM on the church parking lot but the St. Louis Archdiocese has resisted – you can’t win them all.
Still, all this progress is not bad for the credit union no one wanted.