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Home of the Second Chance: 'We Don't Judge; We Help'

St. Louis Community CU dials up efforts to serve the underserved.

January 22, 2014
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Paul Woodruff, St. Louis Community CU

Paul Woodruff (right), vice president of community development for St. Louis Community CU, accepts the Community CU of the Year first place award in the under $250 million in assets category from Pete Dzuris, CEO of Northland Area FCU, Oscoda, Mich., CUNA Board member, and chairman of CUNA’s Community CU Committee.

Over the last seven years, St. Louis Community Credit Union has gained prominence for its ambitious and solution-driven approach to serving low- and modest-income consumers in a market full of them.

The $237 million asset credit union, which boasts 51,712 members, won the 2013 CUNA Community Credit Union of the Year award among institutions under $250 million in assets. Paul Woodruff, vice president of community development for St. Louis Community, discusses with Credit Union Magazine the philosophies that have earned the credit union respect throughout the movement.

Credit Union Magazine: Why did St. Louis Community CU dial up its efforts to serve the underserved?

Woodruff: We were turning away hundreds of people a month who wanted access to the mainstream accounts, but they couldn’t get it. We also started to see an increase in members who used payday loans and lenders, which strips wealth out of the community.

If there’s no alternative to that, people are going to keep using those services, and make the situation even worse. And a part of that is, if they’ve got loan obligations with us, and all their money’s being taken by the payday lenders, that’s a losing proposition for our institution.

Around 2006, we dug our heels in deep, and expanded our membership criteria so that we could overlook past debt owed to other institutions. That was with reason; we weren’t just willy-nilly.

We started our second-chance checking programs, we started our payday loan alternative, we introduced a credit building loan. All of these things started to catch fire; people started to realize, "Hey, I can get a second chance here when no one else will give me one."

The guiding philosophy is, "We don’t judge; we help." The need is there, and it’s greater than what we can serve, even now.

CU Mag: Why should other credit unions devote more resources to serving low- and moderate-income members?

Woodruff: I can encapsulate it these three ways: It’s a business opportunity, it’s a mission opportunity to fulfill our mandate to serve people of modest means, and it’s a community opportunity.

Think about the goodwill that’s built in the community when you have a credit union branch in an area nobody else wants to serve; think about the brand loyalty that comes from that. That’s been something we’ve been able to really leverage and drive growth, not only from low-income members.

There’s a lot of people out there who are socially responsible who want to take out loans, who want to put their money with an institution that’s doing really good things. Doing business this way attracts not only the underserved but people of means who say, "My God, this credit union is doing some amazing things—I want to bank there."

CU Mag: What are the benefits of partnering with other nonprofits and social organizations, especially in terms of your microbranches at their locations?

Woodruff: We’ve leveraged the community trust of our nonprofit partners to gain the trust of people who are really wary of mainstream financial institutions. It made sense from a community outreach aspect to go with that approach, but there’s also a practical aspect.

These are much smaller footprints in terms of the space we’re taking up. It’s less expensive for us to be inside one of these facilities; some of them are completely free of rent; others, it’s very nominal in cost. So it helps our bottom line. And it doesn’t take much staffing.

We typically staff these branches with one person, and we have a floating manager who moves around based on traffic patterns. It makes us a leaner, meaner machine in terms of service delivery while at same time being able to provide quality products to people who need them and value them.

CU Mag: Did anyone at your CU object to partnering with banks on your larger projects?

Woodruff: From a philosophical standpoint, we had to weigh the pros or cons, but ultimately it came down to achieving the mission that we set forth: to better serve our members, and to meet the mandate set by the National Credit Union Act.

There are going to be banks and credit unions that disagree with that decision, that don’t understand why we do that, but in the end it is what matters to our members that counts.

At the end of the day, we’re extremely comfortable with what we’ve been able to achieve with banks. Our appetite to make huge change is bigger than what can we do on own.

You can’t live inside of a vacuum. We’re able to vet these ideas back and forth off people who are coming from a different perspective. That allows us to improve what we do, and ultimately do more.

CU Mag: Why does St. Louis Community CU seek to be, as you put it, “more than a financial services institution?"

Woodruff: As an industry, credit unions have to realize that we are a destination point. When members are in our lobbies or on our phones, if we can use that time to connect people with the resources they need, it builds brand loyalty, but it meets a greater social need.

Given that we’re primarily serving a low-income, financially distressed population, the lack of access to financial services is really just the tip of the iceberg. As we help our members open accounts and walk them through other issues they might be having, we hear a ton of stories of stress.

It runs the gamut—lack of health care, lack of access to day care and employment.

We care about our members, so there’s an impetus to connect them with services that can meet these other needs. But the second part of that is when a family is in crisis, they’re not going to be financially stable in many cases.

So if there’s loan obligations with us, or a negative checking balance, there’s a higher probability those obligations aren’t going to be met by the family because they’re worried about putting food on the table or dealing with the medical crisis that just came up.

If we can connect our members with the resources that are out there, through the network of nonprofit partners that we have, that’s going to help them on an individual and family basis, but it’s also going to strengthen our institution because we know they’re going to be stronger and better able to meet their obligations with us.

CU Mag: What’s the benefit of brainstorming with other credit unions while developing these programs and mining resources like the National Federation of Community Development CUs?

Woodruff: It’s a lot easier to get started once you know this is not impossible. One of the phrases that I love—and I got this from NPR (National Public Radio), but it’s applicable to our industry and our time—is you have to fight inertia.

Once you can overcome the forces that are pushing you back from jumping down this road, it becomes a lot easier to do it, but it also becomes addicting to do, because you see the help you provide, and you want to do more, and more, and more.

CU Mag: That said, this isn’t necessarily easy work, is it?

Woodruff: There are some days I want to rip my hair out. But there’s no way I’d ever quit or leave the industry at this point because I’m in love with what we can do. We have the potential to change lives; it’s so hokey but it’s true.

People are really grateful just because you gave them a chance. 

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