NEW YORK (2/3/12)--A $30 million investment from the Ford Foundation has allowed a community development financial institution to merge with seven credit unions in California, in an effort to expand low- and moderate-income families' access to responsible and affordable financial services statewide.
The Durham, N.C.-based Self-Help FCU saw an opportunity to increase its impact as the economic downturn threatened the survival of all types of financial institutions. By merging with credit unions in low-income communities--some struggling to navigate the economic environment--Self-Help aims to preserve and expand the availability of responsible financial services for families who need them most (PR Newswire Feb. 2).
Sixty percent of low-income neighborhoods in California do not have a bank or credit union, but the state has two times the concentration of check cashers and payday lenders than the rest of the country. Predatory financial services, with loan interest rates of 400% and more, and check-cashing fees costing up to $2,000 a year, cost low-income families in California more than $8 billion a year.
In the two years since the Ford Foundation invested $30 million, Self-Help FCU's asset size grew to nearly $400 million from $75 million; its net worth to $57 million from $12 million; and its membership to nearly 50,000 from 15,000.
Self-Help loans to borrowers also shot up fivefold--to about 15,000 loans for nearly $225 million from about 3,000 loans for $41 million. More than 80% of Self-Help's members are families living in communities that are either economically distressed or have high unemployment.
Self-Help's goal is to have 40 branches with more than $1 billion in assets combine serving 100,000 members. Building off Ford's initial $30 million investment of risk capital, Self-Help is now seeking additional funding to expand the effort.
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