Central Willamette and Express Credit Unions Collectively Receive $1.2 Million in CDFI Grants

Funding is designed to help financial institutions meet the needs of underserved communities.

12/3/2019

CDFI Fund Logo

When the U.S. Treasury announced the recipients of its 2019 Community Development Financial Institutions fund grants, two Northwest credit unions were thrilled to see their names on the list. Oregon’s Central Willamette Credit Union was awarded $565,000, and Washington’s Express Credit Union was awarded $650,000.

The CDFI fund is designed to help financial institutions create and provide affordable products and services to economically underserved communities. Grants may be used for lending capital, loan loss reserves, financial and development services to help increase lending, developing new products and services, or to serve new populations.

Central Willamette will use its grant to improve access to affordable housing, especially for first-time home buyers, said President and CEO, Stacie Wyss-Schoenborn. The credit union worked with nonprofit partner, DevNW, to explore how the rising cost of rent was affecting homeownership in the Albany, Oregon area, where the credit union is headquartered. Based on this relationship, Wyss-Schoenborn said, the team realized “there was more we could be doing to serve the community.”

“Statistically when someone gets into their first home, it makes a big difference for not only that individual but the future generations in that family,” she added.

The credit union’s Chief Retail and Marketing Officer, Amanda Grolemund, pointed out that rental costs often don’t leave room in the budget for saving for a down payment, so families get trapped in a rental. To address this issue, Central Willamette is creating a loan product to help cover the down payment for first-time home buyers. The credit union plans to work with nonprofit partners to generate awareness about their loan product among the underserved renters they are hoping to reach.

“At Central Willamette, we are all about building better lives together, and we want this loan product to really make a positive impact for local families,” Grolemund said.

Express Credit Union is also looking to improve lending capacity for its Seattle-area members. The credit union will use its CDFI grant award to offer more loans to low-income borrowers. Express also plans to open a financial literacy center and fund a full-time community teller to provide financial education, open accounts, and help with loan applications, said Chief Business Officer, Elizabeth Escobar.

The center will be located at Othello Square, a development being built in southeast Seattle, to provide equitable housing, locations for small businesses, and educational opportunities for children and adults.

Although the Othello Square financial education center is not likely to be open until 2021, the credit union is already working to improve its underwriting guidelines for loans to help members refinance their automobile loans to save money. The credit union is also implementing processes to better analyze member data, helping their team improve access to products and services that will improve members’ financial capacity starting in January.

Because the credit union targets lower-income individuals, the risk of potential loan loss means many financial institutions don’t serve the people Express serves, Escobar said.

“A lot of the grant funds go toward a loan loss fund. Because of our size, one bad loan affects the bottom line tremendously, so we’ve been a bit more conservative with some of our unsecured loans, knowing people need them but we’re just unable to take some risks we want to take. And now we can do that,” she said.

Express relies on grant funding to help mitigate the higher costs of potentially risky lending. In addition to the CDFI grant, the credit union has received grants from the NCUA and the Seattle Foundation, among others. Its unique model and success partnering with other local community organizations was highlighted in a recent CU Management article.

In 2019, the CDFI fund awarded $182 million in grants to 321 organizations throughout the United States. For more information, read the full announcement.

“We have seen an increase in the number of CDFI credit unions in the Northwest every year for the past three years, and today, 22 regional credit unions have their certification,” said NWCUA VP of Regulatory Affairs, John Trull. “We anticipate the number will continue to grow. My hope is that credit unions will look beyond the traditional CDFI grant opportunities and find new ways to leverage the numerous Treasury programs designed to help improve the lives of their members.”

Trull provided examples, including the CDFI Bond Guarantee Program, which allows credit unions to access long-term, subordinated debt at well below market rates, the Capital Magnet Fund, which can be deployed to help build affordable housing projects, and New Market Tax Credits, which are granted to a Community Development Enterprise to encourage community investment in low-income communities.

To find out more, contact Trull at 503-350-2209.