By Todd Cohen
DURHAM, N.C. — Five years ago, a crime wave in Durham that preyed on Latinos with cash in their pockets, no access to banks and a fear of police triggered talks that led to the creation of North Carolina’s first credit union for Latinos.
Today, with over $22 million in assets and more than 35,000 members, the Latino Community Credit Union is the fastest-growing credit union in the United States.
The Durham-based nonprofit, with branches in Charlotte, Fayetteville, Greensboro and Raleigh, also serves as a consultant to banks and other financial institutions targeting the state’s Latino population, believed to be the fastest-growing in the United States.
The credit union, which celebrated its fifth anniversary June 26, now is working to address the challenges that come with rapid growth, says John Herrera, its chairman and co-founder, and vice president for Latino affairs at Self-Help, a Durham-based low-income lender.
Those challenges, he says, including better understanding and reaching the Latino market, designing new products to serve that market and spur its growth, and increasing revenue.
While the credit union adds 1,000 to 2,000 new members a month, he says, it projects an operating deficit of $600,000 this year on a budget of $3 million.
To cover $500,000 in annual operating costs for each of its five branches, the credit union needs assets of $10 million per branch, or a total of $50 million, a goal it expects to reach by the end of 2008, says Luis Pastor, CEO.
“Our main goal is reach the sustainability of the credit union,” says Pastor, who heads a staff of 39 people who are bilingual and bicultural.
Individual members account for three-fourths of the credit union’s assets, with the remainder from institutional depositors, including Duke University, banks and 78 other credit unions from throughout the United States.
In its short life, the credit union has had a big impact, says Ivan Parra, lead organizer for the North Carolina Latino Coalition, a network of 53 grassroots Latino groups, and former executive director of El Centro Hispano, a Durham-based group that serves Latinos and helped spearhead creation of the credit union.
“It has prevented Latinos from keeping money in their own pockets, so they’re not victims of crime as much as they used to be,” says Parra, a co-founder of the credit union. “They have also created a model for other financial institutions to follow in terms of successfully serving the Latino community.”
The credit union was formed through a partnership of four groups, including El Centro Hispano; the State Employees Credit Union; the North Carolina Minority Support Center, a network of minority credit unions; and Self-Help, which hired Herrera in 1999 to create the credit union and contributed technical and legal assistance.
With commitments for a total of $1 million in institutional deposits from Bank of America, CCB and Wachovia, the credit union aimed to enlist 500 members its first year.
After meeting that goal in just six months, and quadrupling it in its first year, when it built its assets to $3 million, the credit union received a competitive $1.3 million grant from the U.S. Department of the Treasury in 2001 that allowed it to open new branches and create new services to serve low-income people not served by banks or credit unions.
Now, the credit union is expanding into the market for home mortgages for Latinos, and forming alliances with other organizations, such as the Latino Coalition, says Parra, who also was executive director of the Latino Community Development Center.
The Durham-based center, which helped create the credit union and represents its field of membership, also helped create the coalition, which in turn has received support from the credit union.
The credit union, Parra says, “has had an incredible impact beyond crime-prevention, which was its original intent.”