Credit Unions and Check Cashers Partner in Maryland

BALTIMORE, Md. – A second city in the nation now has a partnership between a check casher and a credit union. The $226 million SSA Baltimore FCU, headquartered in Baltimore, has teamed up with A&B Check Cashers, the largest check-cashing firm in the Baltimore metro area and a non-profit organization called Reach Out Southwest in the financial effort. There have already been partnerships between check cashers and credit unions in New York City, where the $72 million Actors FCU and the $100 million Bethex FCU entered into cooperative arrangements with check cashers that allow credit union members to make deposits to the credit unions through the check cashers. The three-party arrangement in Baltimore is different, however, in that it involves the credit union, the check casher and the non-profit agency actually sharing the same space and offering the residents of a low-income area a mix of cash-based services, credit union loans and other services and financial counseling and education. “This was a way we could bring financial services back to the neighborhood,” said Glenda Anderson, president of Our Money Place, the non-profit’s outreach in the area. The set-up serves the interest of all three organizations, explained Jack Houseknecht, SSA Baltimore’s CEO. His credit union, was established in 1937, faced a real challenge when NCUA granted it the entire inner city of Baltimore as an underserved area addition to the credit union’s field of membership, an addition of more than 600,000 people. “At the time I believe it was among the largest, if not the largest, addition of an underserved area in the country,” Houseknecht said, explaining that the credit union wanted to serve the population with more than just ATMs but lacked the capital and staff to build the necessary branches in the area. The credit union already has one branch centrally located in the area, and two others are accessible with public transportation, but SSA Baltimore wanted to get more faces from the credit union into the areas where people lived and worked. Their solution was to establish what it called Neighborhood Contact Offices that act as partnerships with local non-profit organizations and neighborhood groups interested in bringing banking services into their neighborhoods. SSA Baltimore had established five of these partnerships with different neighborhood groups already, Houseknecht said, and they worked well. The one catch was that the NCOs needed to be cashless in order for the credit union to keep its costs and insurance burden down, and that still frequently left inner city Baltimore residents needing check cashers for cash services. Meeting the neighborhood’s need for access to cash and other financial services, including financial education, had been what motivated the Reach Out Southwest organization, a non-profit group sponsored in part by the Baltimore-based Bon Secours Foundation of Maryland. Reach Out Southwest wanted to replace the branch bank that had first diminished its hours of operation in a local strip mall, and then closed altogether. “We were stuck with having to make a long trip outside the area by public transportation to do our banking,” said Anderson, “or we would have to get our friends and family to make the trip for us,” she said. The organization turned to Maryland’s banking regulator for help. The regulator told Reach Out both about SSA Baltimore and about A&B check cashers, the largest check casher in Baltimore and with whom the regulator had found helpful in the past. “I think it was particularly useful that we heard about A&B from the regulator,” Anderson said. “It helped us have a feeling of security about it,” she added. Check cashers in Maryland, as they are in New York, tend to be stringently regulated. They can not offer so-called payday loans and many subscribe to the codes of conduct being promulgated by the Financial Service Centers of America, the national check cashers association. In fact, Brian Satiski, vice president of A&B Check Cashers, is also president of the Maryland Association of Financial Service Centers, the Maryland branch of FISCA. A&B benefits from the shared arrangement in several ways, Satiski said. First, the check casher benefits from having customers who were also credit union members since in effect the check casher can have greater confidence in a customer who has a relationship with the credit union. The check casher has also benefited by increased foot traffic and transactions through the space it shares with the credit union and the non-profit and it’s in the check casher’s interest to help build up the community. “No matter what, people are always going to need check cashing services,” Satiski said. Satiski used an example a credit union member wanting to make a deposit to their credit union account, but not wanting to deposit their entire check. Such a person steps up to the check casher’s window, cashes their check for a small fee, and then gets a money order, without charge, for the amount they want to put in their credit union account, Satiski illustrated. “Then he or she can take that money order three steps over to the credit union and make their deposit,” he concluded. Anderson said that Reach Out Southwest has appreciated being able to occupy the same space as the former bank, since area residents had come to associate that particular storefront with banking services and knew instinctively to come there. Reach Out America uses its part of the space to counsel area residents about their financial options and to recommend assistance programs, such as the effort to help residents get what they are due from different Internal Revenue Service programs. Houseknecht reported that the new branch had drawn 173 new members who have deposited $248,000 and generated four loans worth $11,000. Across the whole of the underserved area, Houseknecht added that the credit union has been able to make more than 600 loans worth a total of $9.6 million. “From our perspective Our Money Place is working very well,” he said. “We are certainly not doing this solely for the money, but aren’t opposed to profit either. We believe that we can do well at the same time we help people meet their financial needs,” he added. When asked whether he would do it again, Houseknecht replied that the credit union would evaluate its needs in the light of its neighborhood partners. The credit union has plans for more neighborhood contact centers and A&B has more than 20 locations spread across inner city Baltimore. It’s certainly possible, Houseknecht said, the credit union will keep its options open. [email protected]