The Rise of a Minority-Owned Credit Union

Contributing Writer, Donna Michele Ramos

THE HUB: How did this idea come about?

Thomas:  I was sitting on a panel at the African American Leadership Conference presented by the California Black Chamber of Commerce Foundation under the direction of CEO/President – Aubry Stone.   We talked about economic development and someone said we should start a bank and I looked into it.  At the conference the next year, I told them it would be cheaper to start a credit union because a bank requires a few million dollars in reserves and the amount of money was much less for a credit union, only  $70,000 is needed in reserves.  That met with lots of enthusiasm.  I got in touch with the National Credit Union Association, since I noticed Golden 1 is insured by them.  They sent me a chartering instruction manual and package.

THE HUB: How did you get involved?  Do you have a banking background?

Thomas:  My background is in the financial industry.

THE HUB: What are your goals for this credit union?

Thomas:  To use deposits from people in Sacramento to help people and businesses in Sacramento through loans.  I want people to get one-on-one help, to have a relationship with a live person.  I want the credit union to help people make sound financial decisions for themselves.  I want to offer financial literacy classes; our kids need to understand that credit is an investment.  Aubry is passionate about the payday advance loan system; people need to know how it really works and what it really costs them in exorbitant percentage rates.  Young people are putting money on gift cards which don’t build credit; they avoid banks and as a result they cannot get credit, apartments or jobs because they have not established a credit history.

THE HUB: How long is the process from start to finish?

Thomas: It can take up to three years, the application has four parts.  We have completed part one and are moving forward with part two, which is finding out if the credit union will be supported by the community.  That is why we have the survey.  We need to get 600 surveys returned to us.  We get our information from family and friends but it should be deeper, our outreach will be more concentrated, we need community input too.  The basic business of a credit union is deposits and loans, if only a few people are interested in other features, we can wait on them.  We realize that online banking is important so we want to offer that service too.  My goal is to get the application submitted to the National Credit Union Association by year end.

THE HUB:T How large will the proposed credit union be?

Thomas: The members own the credit union, it’s a community effort.  We want to service the underserved communities like, Del Paso Heights, South Sacramento and Oak Park.  The steering committee picked Oak Park because it is central to the other 2 neighborhoods.  The National Credit Union Association has given us a huge territory, beyond what we first envisioned.  They have given us all of McClellan Park, south of Elk Grove Blvd., including the new Delta Shores community that will be developed.  There are 440,000 people in this combined population.  To join the credit union you must live, work, worship or be affiliated with these areas.  We are looking to apply as a low income credit union, to be eligible for federal grants.  43% of our area qualifies as low income so the credit union should get it.  We know we are needed here.  The National Credit Union Association also believes we need a credit union here, they are very positive about our project.

THE HUB: How many jobs do you project this institution will add to the community?

Thomas: We will need a president, vice president of operations, vice president of lending and two more employees, plus tellers and a custodial staff; probably 20 – 25 employees.  It is a domino effect, we help people grow their businesses and they will need to hire more people to help with their businesses.  

THE HUB: What criteria will be used to pick the president and directors?

Thomas: Once we are ready we can build a board, we are hoping to find people locally, with credit union experience who can step right in.  If we have to go further outside the area we will.  We want our members to have confidence.  Members can be members of the board.  We need board names before the application is finalized.

THE HUB: f this venture is successful, when will the credit union be open for business?

Thomas:  We are at a standstill until the survey comes in.  After we receive it, the National Credit Union Association will tell us if we can succeed.