Highly profitable members in underserved investment areas

by Frank Mancari

What is the “banking” story of highly profitable households? What is the “banking” story of highly profitable households in underserved investment areas? “How does the credit union fit into the member’s story? Is the credit union narrative of the banking story the same or different among different geographical areas? Highly profitable credit union households, those which provide $500 or more in profit to the credit union annually, can be located throughout the geographical areas in which the credit union serves. More often than not, most people associate highly profitable households with neighborhoods and communities commonly referred to as “high society” and “upscale avenues”. Highly profitable households are in each geographical area which the credit union serves, even in underserved investment areas. The National Credit Union Administration (NCUA) defines an investment area per Section 103(16) of the Community Development Banking and Financial Institutions (SDFI) Act of 1994. A complete description of underserved areas can be located in the NCUA Chartering And Field of Membership Manual Chapter 3 Part 3 “Service to Underserved Communities”.

Basically an investment area can consist of Empowerment Zones, Enterprise Communities, certain percentage of persons living in poverty, metropolitan area low median family income, high unemployment rate, and areas that meet economic distress criteria established by the Community Development Financial Institutions Fund (CDFI) of the United States Department of the Treasury. A top priority for credit unions should be to identify, market to, and engage with highly profitable members of underserved investment areas. How does the credit union recognize and identify that these households exist in their underserved investment areas? The easiest method to identify highly profitable members in underserved investment areas is that they are very much like highly profitable households in more affluent geographical areas.

 

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