Bert Caldwell: Credit union reaches out to the ‘unbanked’

The unbanked and unbankable have a champion at tiny Inland Empire Trades Credit Union.

Chief Executive Officer Demaris Krummel, with the backing of her board of directors, has made serving low-income union members and their families her mission. And Spokane-based IET, with 4,200 members and $8 million in assets, will be just a starting point if her outreach efforts succeed.

Krummel wants to develop an education program tailored to union apprentices that IET can introduce nationally. To help get there, IET in 2005 obtained National Credit Union Association designation as a provider of services to a low-income membership. That was no small feat. The process took three years because, with a total staff of three, she could work on the paperwork only during the few hours she did not designate to serving members.

The designation entitles credit unions to seek NCUA grants for member education, business development, and other purposes. Krummel says IET has obtained four grants for amounts between $2,000 and $3,000 each. She has used the money to develop a Web site and new printed materials, and for financial literacy training.

On Wednesday, Krummel scored another prize. The U.S. Treasury Department designated IET a Community Development Financial Institution. The credit union is the first in Eastern Washington, and only the fifth in Washington, to get the certification. This despite the fact NCUA considers all of 13 Eastern Washington counties underserved. Many Spokane County census tracts, including much of Spokane’s North Side, also fit the profile, as does Airway Heights and Fairchild Air Force Base.

Underserved? In Spokane County, where one bank or credit union seemingly has a branch on every block? It’s not about bricks and mortar, says Annette Moore, NCUA insurance analyst.

The association weighs income levels, unemployment rates and whether or not financial institutions in those areas offer products useful to the poor. Something as simple as a checking account, for example.

Are customers made to feel welcome, or do they get “the look” that asks “What are you doing here?”

Who are they?

The unbanked have no assets, often lose what cash they have to theft or scams, and pay more for what financial services they do access. Think payday lenders.

The under-banked may have moderate incomes but bad experiences with banks or credit unions, perhaps involving a dispute over fees for bounced checks. They go where they are appreciated. Again, think payday lenders.

An estimated 40 million Americans are un- or under-banked.

“The world isn’t exactly in great financial shape,” Krummel says.

IET has an answer for check-cashers, something called “Payday Privilege,” which allows members to cash a check that overdraws their account for up to seven days. The credit union also offers debit cards and second-chance checking accounts for those who blew up their first accounts. The staff, now at seven, helps members resolve judgments and collection actions.

“I would never say, ‘I’ve helped you three times, I’m not going to help you again,’ ” Krummel says.

She says IET put more than a year into getting CDFI designation, which enables the credit union to apply for grants of as much as $2 million to fund loan programs, add new technology, train staff or continue its education outreach, Krummel’s priority.

To win designation, a financial institution must show that 60 percent of its activities are geared toward the underserved. Moore says the Washington institutions that have qualified are about the size of IET, but large credit unions that serve populations like Native Americans in New Mexico also qualify.

Krummel says IET efforts to get low-income and CDFI qualification have consumed resources it will take some time to recoup, but that is not entirely the point.

“Our ultimate goal is to teach people how to handle money,” she says. “We need to keep going and reach every person.”