A CREDIT
to the
NEIGHBORHOOD
When Victoria Davis and her son relocated to Tennessee three years ago to be closer to her mother, she needed a new car. But without a job, the only loan she could get to buy the 1993 Ford Escort Wagon carried a 22 percent interest charge.
"I had to have a car to work and go to school, but I felt trapped by what it was costing me," said Ms. Davis, who is studying to become a Registered Nurse at a nearby college. She found financial freedom last year at her local church.
Bethlehem Neighborhood Center, where she worships every Sunday, is meeting more than the spiritual needs of Chattanooga's inner city. To help residents like Ms. Davis, the United Methodist-supported center opened Tennessee s first community-development credit union last July. Low-income residents in the area now have a way to save and borrow money. The credit union replaced Ms. Davis high-interest loan with a note carrying a 12 percent interest rate, allowing her to pay off her car loan twice as fast.
By next summer, Bethlehem Community Development Credit Union administrators expect there will be up to 500 members taking advantage of the credit union s savings and lending services.
The center is located in a basement office across the street from Chattanooga s largest public housing project. Lurone Jennings, executive director of Bethlehem Neighborhood Center, pushed to build a local lending institution for the past three years. He is convinced the credit union can play a key role in helping to rebuild the community where he grew up and taught school most of his life.
It's an area without traditional banks or lending institutions. Drug dealers, loan sharks, check-cashing services and auto pawn shops lend money at rates two to three times the rates of standard lenders.
"In a community like this, you've got largely a cash economy and a lot of people prey off individuals who don t have the financial resources, understanding or access to go somewhere else," Mr. Jennings said. "The banks can't serve these individuals because, in many instances, they are not credit worthy."
Enter the credit union. It's not just a place to save and borrow money, it s also teaches residents about saving and investing.
Because it is owned by its members and aligned with the popular Bethlehem Neighborhood Center, the credit union is more readily accepted by local residents than traditional banks. As a community-development credit union, foundations may invest and banks may provide interest-free loans to help capitalize the institution. The credit union recently was named a Ceritfied Community Development Financial Institution by U.S. Department of Treasury.
Center of Service and Love
Mr. Jennings, a former football player, coach and school principal who joined Bethlehem Neighborhood Center in 1996, likens the credit union to the mission outreach of John Wesley to poor and imprisoned families in 18th century England.
"The church must be concerned about the whole person, not just the spiritual person," Mr. Jennings said. As a national mission institution of The United Methodist Church, the 79-year-old enter is well known for its recreational and educational programs. But when Mr. Jennings joined the center, he had a broader vision to get bankers and church leaders interested in helping revitalize Chattanooga s south side.
"Mr. Jennings has reclaimed that place as a center of service and love," said the Rev. Bob Cantrell, district superintendent of Holston Conference's Chattanooga District and a supporter of the credit union. "Not only does he talk about the love of God, people can experience it because of the things that happen there."
Richard Waters, chief financial officer for Trunbull Bakeries, heard Mr. Jennings speak at his church and was convinced of the need for the credit union.
"If you are going to accumulate wealth, eventually you've got to have the opportunity to save and borrow money and unfortunately that is not available in this neighborhood," said Mr. Waters, who chaired the organizing committee for the credit union. "It's just the piece of the puzzle that wasn't there."
Mr. Waters helped assemble a team that raised $211,000 of investments in the credit union from local foundations, individuals, another credit union and the United Methodist General Board of Global Ministries. To help meet Community Reinvestment Act requirements, local banks also agreed to provide $500,000 of interest-free loans for three years.
"It helps us meet our CRA requirements, but it's also good for the community," said DeVann Ard, regional president of Amsouth Bank in Chattanooga. "It's important for Chattanooga to provide financial services in that neighborhood. Hopefully, many of those who start at this credit union will eventually need our financial services also."
Members, not customers
The credit union initially is concentrating on auto and personal loans. It is also offering courses to help residents learn ways to save, invest and buy homes.
"We try to be a little more flexible and understanding of our members and their needs," said Roderick Morton, credit-union manager. "We're trying to enlighten people on how they can use credit wisely and how they can build their own savings. "
Mr. Morton has worked in financial lending most of his life.
A dozen years ago, he joined another credit union and remains an unabashed supporter of such membership-owned associations. Mr. Morton said he discovered the advantages of having a community-development credit union during a seminar last year and soon after was approached about managing Bethlehem Centers near where he grew up.
His return to his old neighborhood was similar to Mr. Jennings own experiences. In fact, the two have been friends since their days together on the football team at Howard High School.
As a budding young quarterback in 1970, Mr. Jennings recalls starting every play taking the ball from his center, Roderick Morton.
"I gave him the ball to make him a star," Mr. Morton quipped. "We've come full circle."
Today, Mr. Morton is helping provide Mr. Jennings and other community members with the capital to help revitalize one of Chattanooga's poorest communities.
"The relationship of a member at a credit union is different than that of a customer at a bank," Mr. Morton said. "We're not for profit -- not from charity -- but for service."
For Victoria Davis, the credit union has helped her keep her car and go to college. "It's really a Godsend to this community," she said.
Dave Flessner is business editor for The Chattanooga Times in Chattanooga, Tenn., and a member of Hixson United Methodist Church in Hixson, Tenn.