CU QUICK FACTS
HQ: Lancaster, PA
Data as of 06.30.19
12-MO SHARE GROWTH: 7.5%
12-MO LOAN GROWTH: 13.5%
Everence Federal Credit Union ($206.0M, Lancaster, PA) serves Amish, Mennonite, and Anabaptist groups across the country. The credit union is the banking arm of Everence, a fraternal benefits organization that provides faith and values-based investments, insurance, and retirement plans.
Both Everence and Everence FCU help people and institutions integrate faith and values into financial decisions that ultimately support people, places, and communities. Here, Kent Hartzler, CEO of Everence FCU, shares what he’s learned about serving niche communities and why his cooperative’s mission is more relevant to a broader group of consumers than ever before.
What role does Everence FCU play in the larger financial services market?
Kent Hartzler: When we think about our contribution to the world, we ask ourselves, “Does the world really need another financial institution?”
Every credit union needs to ask itself what niche it serves. For Everence, it’s about stewardship — we want to be good caretakers of the things we’ve been entrusted. There is a faith perspective, but there is also the idea of being a good steward of the earth, our resources, our health, our money. That is the space we want to play in.
The second part of our higher-level message is about generosity. Beyond helping people care for themselves and their families, we help people be generous to their communities.
Stewardship and generosity are the two pillars we stand on at Everence.
How do you communicate with those members who shy away from technology and, generally, aren’t as involved in the larger world?
Kent Hartzler, CEO, Everence FCU
KH: We’ve historically served Amish and Mennonite members — and that’s still the core — yet our message is broadly attractive to a lot of other people as well. We don’t necessarily focus on theological statements or what churches people belong to as much as those broader themes of stewardship and generosity.
Some groups, like the Amish, might make different lifestyle choices, but that message really resonates with them. Tactically, how we communicate with that group is more traditional. We do a lot through print, word of mouth, and even fax and bank by mail methods. We’re developing our online and mobile channels, but this group isn’t as concerned with those kinds of things.
How has Everence FCU adapted traditional products or services to meet these members’ needs?
KH: Our Amish members are conservative in a lot of different ways. They’re conservative borrowers and don’t take out consumer loans like credit cards or revolving debt. However, appreciating assets like real estate, agricultural loans, and small business loans are a need of this community.
For example, it is common for Amish members to have multi-purpose property. Land typically stays in the family for generations and might be split up over time for adult children and grandchildren — turning a 200-acre farm into multiple, smaller properties. Just like most of us, our homes are our single-largest asset. In the Amish community, what looks like a primary residence loan at first glance likely will not conform to Fannie or Freddie guidelines because the family also runs a small business or farm on the property. This makes many of our real estate loans unconventional and non-conforming for the secondary market.
There are other unique factors as well. For example, many properties do not have electricity, plumbing, or conventional insurance. Many Amish homeowners are self-insured through mutual aid insurance. The community is the stop gap and the local church governance signs for that person. If there is a fire or a storm, the community will rebuild. All those factors require us to make accommodations in our underwriting — both for Amish members and non-Amish members who fit the same criteria due to their different lifestyle choices.
Our net charge-offs are low, but delinquency can run high because Amish members aren’t immune to life’s difficulties, they just tend to handle them differently. They’ll reach out to their church and, if needed, set up a designated trustee to work with that individual or family. They will sometimes liquidate assets or take other actions to right the situation. However, it does take time, so although we rarely see a net loss or charge-off, our delinquency ratio reflects the longer time to solve problems within the community.
We work with the groups and their systems rather than becoming overly aggressive or impatient. We’ll carry something on our books for as long as possible if we have good faith that the community is supporting the situation and the member is getting help. It’s refreshing to be part of those situations.
Everence FCU lives out the principle of stewardship through loan, investment, and deposit products. Read more.
How do you build relationships with the various church communities you serve?
KH: We have a high-touch business development team. We serve members in all 50 states, but we concentrate our efforts in Lancaster, PA; Northeast Ohio; and Northern Indiana.
We have traditional branch offices, and our business development officers go out and relate, in-person, to local small businesses or farms. That’s the most effective way — in person. That said, there are Amish settlements that have moved out of the big concentration areas. For example, a lot have moved south and created settlements where land is cheaper. Some young settlements don’t have branches near them but can still transact with us through phone, fax, and mail.
What are some success stories you can share from working with one of your core groups?
KH: We have a faith community loan program that’s simply a way to bring in a third-party guarantor to enhance credit. For example, if we’re presented with a credit request from someone in an Amish church, their lives tend to be very holistic. There might not be separate business lives or personal matters that aren’t discussed — it’s less individualistic and more full disclosure. If we can’t approve a loan normally, we will bring in a faith community, and a group of people will pledge collateral or step in as guarantor.
We also have a foundation, in partnership with our Everence affiliate organization, that does a lot of charitable work. There are matching grants available and a network of 1,700 volunteer advocates in local churches that act as our eyes and ears to identify needs.
We give back approximately $1 million a year to churches and communities through many small grants. It’s an opportunity to serve a niche group that I believe other credit unions have within their memberships. The small grants make a tangible, real difference and demonstrate the community impact of a cooperative in a very direct way.
We all need to go back to who we’re serving and why.
What challenges are there in serving these niche groups?
KH: There can be challenges with BSA (Bank Secrecy Act) as many of our Amish members don’t have photo IDs. Knowing the member is important, but we also have customer identification procedures that allow for non-traditional, non-customary verification. In some cases, we go to the church community and get verification from an Amish bishop. They’ll sign forms to verify that these individuals are a part of the faith group and they are who they say they are.
If a credit union uses shared branching, that can present extra steps or challenges. The good news is, these folks aren’t in a hurry and many still rely on bank by mail, so these challenges don’t usually bother them. It’s intriguing and somewhat refreshing — speed doesn’t matter as much as accuracy and trustworthiness.
What tips do you have for how other credit unions can serve niche groups within their own memberships?
KH: We all need to go back to who we’re serving and why. A lot of credit unions have shed their original charter groups and mother employee groups in favor of community charters. In doing so, credit unions can get lost with every other financial institution and lessen what we bring to the table that is truly unique.
One example of how we drive our value statement through our products and services is the My Neighbor Credit Card. It’s a charitable giveback card that returns 1.5% to the charity or non-profit of the member’s choice. We offer 10,000 charities around the country, and if the member’s charity isn’t listed, we’ll add it. We’ve given back $500,000 through this program in just 18 months.
My overall advice is to get back to the basics. Understand who the credit union is trying to serve and how it is distinct. Then, drive that through its products and services. As an industry, if we’re simply competing on price and speed, then I’m not hopeful. Thinking back to why we exist, with focus and clarity, would do us all well.