MODESTO, Calif. - Like many others, Community Trust Credit Union in California's central valley is aggressively going after the Hispanic market. But the $50-million credit union has done more than hire a couple of bilingual tellers. Community Trust has completely overhauled its marketing strategy, changing its name and partnering with two established entities: a local car dealership that caters to Spanish speakers, and a non-profit organization with a 37-year history of providing social services to the Hispanic community. Formerly Food Processors Credit Union, CTCU already had a foothold in California's agricultural industry, which employs more than one million people, produces more than half of the nation's fruit, vegetables and nuts, and draws hundreds of thousands of migrant farm workers to the area. The credit union's agricultural history and a community charter had already resulted a large percentage of Hispanic members, but there was still the need to do more, said Sandell McLaughlin, CTCU's Community Development Director. McLaughlin told a familiar story: undocumented workers were unable to open accounts, so they cashed paychecks, often at inflated costs; and, because they dealt only in cash, were targets of crime that sometime turned violent. And not only were undocumented workers unable to enter the financial mainstream, even legal immigrants had a general distrust of financial institutions, McLaughlin said. "In Mexico, banks are only for rich people, and common people are not welcome there, so why would they be here?" she explained. The community development pro added that in addition to cultural differences, the instability of Mexican banks contributed to a distrust of all financial institutions. The credit union built its first partnership six years ago with Robert Mendoza, the owner of a used car lot who is trusted within the Hispanic community. Mendoza was looking for an institution that was willing to make used auto loans to first-time borrowers who were legally in the US, but lacked a credit history. Although the credit union already had risk-based pricing in place, CFCU had to make some adjustments to its underwriting strategy to fund Mendoza's customers, including using household income instead of just the borrower's income, because there are often more than two adults contributing to the household. "We've tried to be more holistic and still make good loans, and I think we've done that, because our delinquencies are almost nil on these loans," McLaughlin said, adding that the credit union was very careful not to break any regulations while loosening underwriting policies. After Mendoza's recommendations resulted in memberships, the credit union was open to another partnership when El Concilio came calling in 2003. El Concilio, which provides 21,000 central valley residents with social services each year, was looking for a partner to provide safe check cashing, wire services to Mexico, and an opportunity for its clients to enter the mainstream banking system with an thrift institution. Jose Rodriguez, Executive Director of El Concilio, said he couldn't find an institution that was willing to devote the time and money required to adequately serve his clients' interests. Rodriguez recalled that when he would meet with prospective institutions, he was frustrated that many were primarily concerned with how much it would cost to reprint materials in Spanish. Some even voiced concerns about having bilingual staff, because a manager unable to speak Spanish would be unable to regulate, or legally defend, what the bilingual employee was telling the customer. "It has to be a long-term commitment. Financial institutions can't expect to roll out the carpet today and have everyone come in - it takes time to establish trust, get the word out, and teach the benefits of having an account. Institutions must make the investment before they can see the return," he explained. To Rodriguez's surprise, Community Trust already had brochures printed in both English and Spanish, and not only was more than half of the staff bilingual, they were permitted to conduct business in Spanish, if needed. An El Concilio board member was invited to make a presentation to the credit union board, and "we introduced them, let them date for a little while, and the relationship blossomed from there," McLaughlin said. Because 70% of Community Trust members are Hispanic, the institution was able to gain designation as a community development financial institution, and qualified for CDFI grants. Money from the first grant was used to open a branch at El Concilio's Stockton headquarters. "El Concilio has bent over backward in making their resources available, from running a full page ad promoting the credit union in their newspaper for free, to promoting us with their people constantly," she said, adding, "it's been an excellent partnership, and I'm looking forward to seeing some final figures as they roll in." McLaughlin said the 6-month old branch is only averaging five new members each month, but is only open two days a week. The branch also allows non-members to use money order and money wiring services, hoping that these services will gain their trust and convert into memberships. Community Trust is also very active in financial education, winning a 2005 CUNA Diamond Award for its Money Sense CD-ROM training program, which El Concilio uses to provide financial education. The credit union also participates in the Volunteer Income Tax Assistance (VITA) program, which matches university business and accounting students with low-income families to provide income tax filing assistance. "This was our third year, and we did 190 returns that resulted in an average $2,500 refund," McLaughlin said, "and if you do the math, that means that more than $500,000 went back into the hands of the working poor as a result of this program, which is something we're very proud of." While assisting with forms, CTCU employees educate VITA clients about credit union accounts, including direct deposit for faster refunds, and help undocumented workers gain ITIN numbers so they can file taxes through the 10-year-old controversial IRS program. McLaughlin said the 12,000-member credit union is not planning any new programs or partnerships in the near future. "We've really become overwhelmed with opportunities, because as word gets out, there are just so many places we can take this," she said. "Right now, we're just trying to maintain our service standards and remain fiscally sound - it's important we don't outgrow ourselves or burn our staff out." -

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