Lending to ALICE Families

Credit union name: Southern Chautauqua Federal Credit Union

Location: Lakewood, NY

Asset size: $140 Million

Field of membership: Community Charter

CEO: John E. Felton

With assets totaling $140 million, Southern Chautauqua Federal Credit Union (SCFCU) located in Lakewood, NY has dedicated itself to serving the unique financial needs of ALICE (Asset Limited, Income Constrained, Employed) families in Chautauqua County. Under the leadership of CEO John E. Felton, SCFCU has become a beacon of hope and support for the community, particularly for those who are often overlooked by traditional financial institutions.

SCFCU has long understood that Americans of modest means are in critical need of a trusted financial partner. To address this, the credit union has structured its lending practices to cater specifically to individuals with lower credit scores, often referred to as C, D, and E paper. By focusing on this demographic, SCFCU not only changes lives by improving members’ financial wellbeing, but also enriches the community by elevating the standard of living for many families.

For SCFCU, the approach to lending is personalized and holistic. The credit union staffs twenty-two well-trained lenders across five branches, all skilled in building strong relationships with members. This team is trained to “Interact before you Transact,” emphasizing listening to understand members’ needs beyond the surface level. This people helping people philosophy ensures that every member feels valued and understood, fostering trust, financial transparency, and cooperation.

In 2023 alone, SCFCU’s refinanced over five hundred loans that amounted to more than $6.5 million. These refinancings significantly benefited members by saving them an average of $2,100 in interest, reducing their interest rates by 7%, and cutting down their loan terms by 23 months. This strategy not only alleviated the financial pressure members faced, but also provided education on managing their finances more effectively.

Considering the transportation challenges in the rural areas of Chautauqua County, SCFCU implemented a GPS starter interrupter program. This program enabled the credit union to extend auto loans to those who might not meet traditional lending criteria. By enrolling in the GPS starter interrupter program, the member is notified that if they are five days behind on their payment, they will get an alarm in their car reminding them to make the payment.

However, if no payment has been made or an arrangement made with the Credit Union, then after another two days (a total of seven days past the due date of the payment date) the car will not start. It’s important to note that the car will never turn off while it is operating. But, once the vehicle is turned off, it will not turn on. This innovative approach provides a safety net for the credit union while offering members a chance to own a vehicle that is often essential for maintaining employment. The program is carefully tailored to ensure members are aware of their responsibilities and the operational details of the device, promoting responsible borrowing and repayment behaviors.

SCFCU also leverages grassroots marketing through a member referral system, which has proven to be both effective and affordable. This program encourages members to refer new clients to the credit union, rewarding them with a financial incentive for each successful referral. In 2023, this initiative is expected to attract at least two hundred new loans, demonstrating the power of community-based marketing.

The credit union’s Ring Back program was implemented to improve member satisfaction.  After a product or service is added to an existing or new member’s account, SFCU would call within 45 days to review the features of the added product or service.  Additionally, after one year of loan payments, members will receive an anniversary call from the lending representative who made the loan.  During this call, there is a financial check-in with members to discuss any financing needs or ways to improve their credit scores.

SFCU stands out as a prime example of how financial institutions can profoundly impact their communities by focusing on the needs of ALICE families. Through innovative lending practices, personalized member services, and community-oriented programs, SCFCU not only supports the financial well-being of its members but also fosters long-term loyalty and trust. This commitment has positioned the credit union as an important financial partner in Chautauqua County, helping numerous families achieve greater financial stability and success.

The above profile was curated from Southern Chautauqua Federal Credit Union: “Lending to ALICE Families”, a submission in the Blueprints for Small Credit Union Success published by America’s Credit Unions – March 2024