Hispanic Resource Center

News Updates...

(updated December 20, 2005)

Hispanics need one-on-one financial counseling

If your credit union wants to reach Hispanics, it should start paying more attention to one-on-one financial counseling efforts.

So says the National Council of La Raza (NCLR) in touting the release of its new white paper “Financial Counseling: A Meaningful Strategy for Building Wealth in the Latino Community.” NCLR is asking Congress to allocate $150 million to address the problem.

Despite existing efforts to improve financial literacy among immigrants, NCLR’s view is that Congress and the White House need to take more meaningful steps. Building another financial literacy workbook and translating it into Spanish isn’t working, NCLR claims. Instead the Hispanic market needs customized, one-on-one financial counseling to build a basic understanding of financial services.

When it comes to access to financial counseling, there’s a huge disparity between low-income Hispanics and other consumers. “The current structure of the market for financial advice ensures that only those who can afford it may access good-quality information and counseling,” the report says. “Because Latinos tend to be asset-poor and to have lower comparative incomes, many are barred from accessing the best financial advice that the market can provide.”

Most financial education programs consist of broad, generic information in the form of classroom- style lectures, workbooks, Internet-based seminars, and financial literacy outreach campaigns. While well intentioned, NCLR says there is no evidence these methods are helping Hispanics build assets and wealth. The median net worth of a Hispanic household in 2002 was $7,932 vs. $88,651 for White households.

One-on-one counseling like the U.S. Department of Housing and Urban Development’s prepurchase home ownership counseling to low-income families are more helpful NCLR says. Since 1997 the NCLR Homeownership Network has helped more than 17,140 families from low-income Latino neighborhoods to purchase homes.

NLCR cites a lack of affordable, certified financial counselors … a lack of explicit economic incentives for financial advisers and counselors to target low-income consumers … and a lack of federal resources for targeted, community-based, one-on-one financial counseling programs as the key issues to overcome.

Among the recommendations NLCR is making: Asking Congress to create a refundable federal income tax credit for low-income families to cover the cost of one-on-one financial counseling … creating a $100 million grant program for community-based organizations to provide one-on-one financial counseling services … and providing $50 million to support expansion of the IRS’s low-income tax preparation programs.

Remittance programs key to bankers’ Hispanic strategy

While there’s not one single strategy that banks are using to woo the Hispanic market, many are focusing on remittances as the cornerstone to their Hispanic outreach efforts.

That’s because an estimated 42% of unbanked Hispanics send money to their home country. World Bank estimates remittances through formal channels totaled $93 billion worldwide in 2003. More striking still are estimates that remittances through ‘informal’ channels (mail and hand delivery) could add another $93 billion in remittance market traffic.

The Inter-American Development Bank (IADB) estimates that the remittance market to Latin America alone could reach $300 billion by 2010. IADB says 10 million immigrants living in the U.S. send a few hundred dollars home an average of 12.6 times a year.

While offering low-cost remittance service earns banks a positive regulatory mark on their community reinvestment requirements, Bank of America (BofA) launched its free “SafeSend” remittance program to Mexico this year with high hopes of cross-selling Hispanics a variety of other services. With the giant money center bank having 93% of all U.S. Hispanics households living it its markets, and the Hispanic market expanding four times faster than other markets, BofA thinks it has a winning strategy.

Among the first services BofA will cross-sell: starter checking accounts. The market is already spending more than $1.5 billion per year in fees to cash checks and the money center bank wants to tap that pipeline. Hispanics without a credit history or a FICO score above 500 qualify for its basic checking account. So far in 2005 BofA says it has opened more than one million demand deposit accounts, with one-third the total coming from unbanked consumers.

Citigroup is using a binational credit card to make it easier for migrants to send money across the border. Issuing a card to a U.S. cardholder and a designated person in Mexico, the card allows the U.S. cardholder to pay the entire bill in dollars anytime. The cardholder in Mexico can withdraw money from participating ATMs.

Competition lowers costs of remittances

A few years ago, Western Union and Money Gram handled 40% of the remittance transactions between the U.S. and Mexico. Now their market share is down to 15% as more and more credit unions, banks, and other vendors get into the remittance market.

Competition has lowered the cost of distribution from 15% in the late 1990s to 7.3% in early 2004, according to a recent story in Profitwise News and Views, a publication of the Federal Reserve Bank of Chicago.

Pay attention to risk management issues if you’re thinking of offering a remittance program, warns the publication.

Remittance products are possible targets for money laundering schemes because they allow quick, inexpensive transmission of money across borders. Auditing such transactions can be problematic.

In addition to safeguards in the U.S. Patriot Act, here are five tips from Michael Frias of the FDIC:

  • Set daily and monthly limits on the amount that’s transferred;
  • Limit the number of debit or stored-value cards issued to a single person;
  • Put in a program that flags unusual activity;
  • Limit the maximum balance on an account or debit card;
  • Monitor debit card distribution or distribution of funds to recipients.

Unbanked is focus on Iowa CU Foundation multimedia campaign

The Iowa Credit Union Foundation recently has received a $10,000 grant from Prairie Meadows Racetrack and Casino through the casino's 2005 community betterment grant program. The money will be used to create a multimedia public awareness campaign that will educate Des Moines-area Hispanics on the high cost of being "unbanked."

"Statistics show that more than half of Hispanics in the U.S. do not use traditional financial institutions such as credit unions and banks," says Wendy Wicks, director of community development for the Iowa Credit Union Foundation. "We're very excited about this campaign's potential impact."

Components of the program will include:

  • A comprehensive media relations campaign targeted toward media that focus on the Des Moines-area Hispanic market and stakeholders in local organizations that serve Hispanics;
  • Development and dissemination of a Spanish-language Public Service Announcement (PSA) for gratis broadcasting on radio stations that focus on the Des Moines-area Hispanic market; and
  • Creation and dissemination of Spanish-language collateral materials such as an informational brochure and informational posters. These materials will be distributed to organizations and businesses that serve the Des Moines-area Hispanic community, such as churches, grocery stores, community centers, and social service agencies.

Though the initial funds will be used to target Hispanics in the Des Moines-area, the Foundation intends to eventually roll out the campaign statewide.

The grant was applied for as part of the Foundation's commitment to community development. In April, 2005, the Foundation began a partnership with the Iowa Credit Union League to jointly fund a two-year community development pilot program in an effort to financially educate the public and help Iowa credit unions reach out to financially underserved populations.

Billboard advertising works for Hispanics

Those transit ad posters and billboard ads may lack the glamour of TV and magazines, but they deliver the Hispanic market.

So says the Outdoor Advertising Association of America (OAA). In a study of freeway-traveling car passengers wearing eye-tracking devices, Hispanics were just as likely as other consumers to read billboards and nearly twice as likely to influenced by such advertising, OAA says.

Why Hispanics react to ‘out-of-home’ advertising is not clear, but such advertising is very common in Latin America and that may account for the difference. Others speculate that outdoor advertising in heavily populated Hispanic communities works because they see it when they are out and about in the marketplace.

The Outdoor Advertising Association cites low cost and efficiency as a reason to consider billboards. A typical cost per 1,000 viewers is usually less than $10, while print ads will cost at least double.

Hispanic bank customers swindled in Chicago

A growing list of customers of U.S. Bank in Highwood, Ill., most of them Mexican immigrants who speak little English are claiming their savings and other accounts are missing or have been depleted without their permission, says the Chicago Tribune.

U.S. Bank, meanwhile, has filed suit against a former teller and accusing her of stealing more than $1.3 million from customer accounts.

U.S. Bank alleges Estela Ramos, 46, of Highland Park, who worked 27 years at the bank before being fired Nov. 11, used an elaborate Ponzi scheme to withdraw money from customers' certificates of deposit (CDs), according to the lawsuit filed in U.S. District Court in Chicago. She pulled money from other customer accounts to reimburse the CDs before they matured, and withdrew money for personal use, according to the suit.

More than 100 customer accounts are involved, according to the lawsuit. Many customers whose accounts were depleted are Mexican immigrants who trusted Ramos because she was the only Spanish-speaking employee at the bank.

Hispanics less likely to participate in retirement plans

The Employee Benefit Research Institute (EBRI) is reporting that Hispanics are the least likely ethnic group to participate in company-sponsored retirement plans.

According to EBRI’s research, about 29% of Hispanic workers contribute to the plans, compared with a 53% participation rate among whites and a 46% participation rate among blacks.

Analysts say the lower Hispanic participation rate is due to a number of factors: Hispanics face a lack of experience with retirement options … many work for employers who don’t offer retirement plans … many earn such meager wages that saving for retirement is low on their list of priorities.

Additionally, new immigrant Hispanics are less likely to participate in a retirement plan as native Hispanics. A July report by the Retirement Security Project and the National Council of La Raza noted that 43% of Hispanic workers say they know nothing about retirement savings vs. 12% for the broader population.

Employers that automatically enroll workers in retirement plans have the lowest disparities in participation, EBRI says. Participation jumped from 18% to 75% among Hispanic workers at companies that have launched automatic enrollment, according to a study by Brigitte Madrian, an economist and professor at the Pharton School of Business in Pennsylvania.

English only rule will backfire

Businesses that encourage Hispanic workers to sell goods and services to Hispanics in Spanish, but try to enforce an English-only rule otherwise are certain to face legal challenges.

Five employees at Sephora USA in New York filed such a suit and the U.S. Equal Employment Opportunity Commission is jumping on the bandwagon.

Cases involving English-only policies are mounting at the EEOC, though most instances of language discrimination go unreported because workers fear retaliation.

(updated October 24, 2005)

Financial institutions could be big winners in Hispanic market

More than 400 credit unions, banks, and thrifts are accepting the matricula identification card and providing services to undocumented immigrants, according to the Mexican Foreign Ministry.

While most analysts put the number of undocumented immigrants in the U.S. at around 11 million, a recent study by Bear Sterns Asset Management concluded that data on housing permits, school enrollment, and foreign remittances suggest there could be as many as 20 million nonresident immigrants here.

Hispanics, one the nation’s largest sources of population growth, add nearly 700,000 new consumers to the economy every year. Businesses are targeting the undocumented immigrants because 84% of them are 18- to 44-year-olds, in their prime spending years.

Wells Fargo, alone, has opened more than 500,000 matricula accounts, which now represent 6% of the bank’s total account base. The giant bank says it is averaging 800 new accounts a day across its network of branch offices in 23 states.

Financial institutions will be the big winners when it comes to serving undocumented Hispanics, says Business Week. Nearly one third (32%) of all Hispanics lack an account with a financial institution.

The Federal Deposit Insurance Corporation (FDIC) predicts that one-half of all the U.S. retail banking growth will come from the Hispanic market. Indeed, one North Carolina credit union recently reported its membership growth had been flat until two years ago when it began reaching out to the Hispanic market. Charlotte Metro Credit Union grew its membership nearly 20% since targeting the Hispanic community, according to Deb McLean, vice president of marketing.

Many financial institutions are using individual tax identification numbers (ITINs) to qualify nonresident immigrants for mortgage loans. Since 1996, the Internal Revenue Service has issued 8 million ITINs, including 900,000 last year.

Expect pressure to mount on Fannie Mae and Freddie Mac to create a secondary market for ITIN loans. The National Association of Hispanic Real Estate Professionals says the ITIN and conventional mortgage market for undocumented immigrants could be worth as much as $60 billion over the next five years.

Most observers don’t see the government enforcing a 1986 law forbidding employment of undocumented immigrants—no matter how loudly groups like the Washington-based Friends of Immigration Law Enforcement complain. Nonresident immigrants already make up half the nation’s farm workers, 25% of the laborers in the meat and poultry industry, 27% in the drywall and ceiling industry, says the Pew Hispanic Center. Last year, more than one million of the nation’s 2.5 million new jobs went to Hispanics--mostly recent immigrants, Pew says.

CUs seek multi-lingual employees

As credit unions reach out to serve the Hispanic community, more and more are seeking employees who are fluent in other languages.

CUNA’s 2005 Complete Credit Union Staff Salary Survey Report asked credit unions if they are offering pay differentials for bilingual FTEs. About 4% of credit unions currently offer such pay differentials, according to Vicki Joyal, vice president of Market Research Services at CUNA. Joyal expects the number of credit unions offering pay differentials for these language skills to expand over time. Nationally, data from the Equal Employment Opportunity Commission suggests employment of minorities at credit unions closely mirrors that of the general population.

Credit unions big and small are recruiting bilingual FTEs, according to an informal chat list questionnaire from CUNA’s Hispanic Resource Chair Danielle Chatfield. Of the 30 credit unions responding, the range of FTEs with foreign language skills went from 0% of a credit union’s work force to 60%. FRB FCU, in Washington, DC, for example, is a $36 million credit union and six of its 10 staff members are bilingual. Meanwhile, 50% of Tropical Financial Credit Union’s, Miami, Fl., 290 employees are bilingual.

Credit unions see the value in having a multicultural work force, and many actively recruit for diversity. They say they recruit for a variety of reasons--to be representative of their membership, to be socially responsible, to capture different viewpoints, and to try to serve the whole community where they operate. Though one credit union respondent noted, "We avoid trying to recruit specifically for anything other than the skills and abilities required to provide quality member service."

A respondent at LANCO Federal Credit Union, Lancaster, Pa., noted, "We always appreciate if we can get a bilingual employee…they are hard to come by."

Texas League launches phase two of outreach program

Credit unions qualifying to participate in "Juntos Avanzamos" (together we advance) program will be eligible for grant money available through the Richard L. Ensweiler Fund from the League’s Community Investment Fund.

Texas has seen its Hispanic population explode. Over the next 25 years, the state will have a younger and more diverse population than any other state in the country, and Texas credit unions are targeting this market for membership. With purchasing power of more than $90 billion alone, Texas credit unions cannot afford to overlook the new market.

Under the Juntos Avanzamos program, the League will identify those credit unions with a true capacity to serve the Hispanic market and then provide them with more resources to be successful.

Texas credit unions interested in applying for the program should fill out a "capacity to serve" application, located at www.tcul.coop. (Texas CUL Insider).

America still land of opportunity

Researchers at the American Immigration Law Foundation, Washington, D.C., say immigrant women are driving small business growth in the U.S.

For the decade from 1990 and 2000, the number of immigrant female entrepreneurs spiked 190%, compared with a jump of 160% growth rate among immigrant men, a new foundation’s study says.

The foundation’s study suggests more than four of ten female immigrant entrepreneurs come from Latin America or the Caribbean. The second-largest immigrant group of female entrepreneurs comes from Asia and the Pacific Islands.

Banking industry continue targeting Hispanics

You know the Hispanic market offers real potential when the for-profit bankers target this market segment.

Wachovia Corp., Charlotte, N.C., one of the largest providers of financial services with offices across the country, announced this past week that it is introducing bank statements in Spanish, beginning Nov. 19.

In addition to the Spanish-language account statements, Wachovia offers a free checking account, premium savings account, systematic CD account, and a foreign remittance card through its "Cuenta con Todo" program. The giant bank is throwing big money at this market with nearly 600 designated financial Hispanic service centers.

Meanwhile, the FDIC is spending nearly $2 million to promote its financial literacy program "Smart Money" to Hispanics. Bank of America Corp. has signed on to promote FDIC’s program.

You’ll have to spend money to reach this market

A new study from the Association of Hispanic Advertising Agencies suggests financial institutions wanting to tap the Hispanic market better reach deeper into their marketing pockets if they want to be successful.

Hispanics want access to financial services in the U.S., but many are not aware of the services that are available, says the Association’s study. In fact, the study found that financial services companies should allocate a minimum of 7% of the total national market budget in 2007 toward the nation’s 40 million Hispanic consumers. That would be more than three times what was spent in 2001.

Don’t be surprised if more companies dig deeper in their pockets for this market. The number of Hispanic households earning more than $100,000 annually grew 126% between 1991 and 2000, compared to a 77% growth rate for the general American population.

Merrill Lynch is one firm that isn’t standing still. The firm says there are about 3.7 million affluent Hispanics in the U.S., and their combined buying power will be about $292 billion next year. Nearly two-thirds of these affluent households are in California, Texas, and New York, say brokerage firm representatives.

Help Hispanics understand credit scores

With little experience transacting financial business in this country, many Hispanics don’t understand the credit scoring system and don’t know how to get their credit scores.

They aren’t alone. More than 90% of consumers know credit scores affect heir ability to make major purchases, only one-third actually know their credit score. Indeed, since the Fair and Accurate Credit Transactions Act (FACT Act) became law, only four of 10 consumers have taken advantage of their ability to learn their credit scores.

While checking out credit scores regularly can help detect identity theft--a problem that 27.3 million Americans have experienced in the past five years--very few consumers are taking advantage of this opportunity.

One reason to teach your Hispanic members how to monitor their credit scores: More than one- third of the people who received their free credit report since the FACT Act passed found errors in them.

"Understanding how creditors use credit scores will provide all members--not just Hispanic members--the ability to better manage their finances," says Susan Tiffany, director of the Credit Union National Association’s consumer publishing operation. Tiffany cites the low national savings rate as a real problem area.

A recent survey from HSBC-North America suggests that only 26% of consumers actually stick close to their budget. The HSBC study also reports that while 80% of consumers are concerned about their level of savings, four of 10 consumers say they do not have enough money saved to cover more than one month of basic living expenses.

No typical household among Hispanics

Segmenting the Hispanic market can be difficult, according to "the U.S. Hispanic Economy in Transition: Facts, Figures, and Trends" from HispanTelligence.

Hispanic households average 3.4 people with 1.6 of those people being wage earners. That’s slightly higher than non-Hispanic households, where the average is 2.4 people with 1.3 wage earners.

When it comes to having five or more people in a household, nearly one-third of Hispanic households reach that mark. Only one-tenth of non-Hispanic households have five or more people.

Nearly 48% of Hispanics own a home. And the average annual income for the Hispanic market is $44,468, according to the current population surveys from the U.S. Census Bureau.

(updated August 15, 2005)

Six states make up the New Latino South

Credit unions in six southern states--Arkansas, Alabama, Georgia, North Carolina, South Carolina, and Tennessee—have significant opportunities to reach out to the Hispanic population.

A new Pew Hispanic Center study called “The New South” reports these six Southern states have registered the fastest Hispanic population growth rate since 1990. Thirty-six counties in those six states all had an increase in their Hispanic population of 200% or more over that time period.

Hispanics are moving to where the jobs are. In many of the communities studied, a low Hispanic population surged as word of a robust economy spread. The study notes that these states added jobs for both Hispanic and non-Hispanic workers at rates well in excess of the national average.

The Latino population grew 394% in North Carolina and 211% in South Carolina. The median income of Latino workers in those six states was about $16,000, about 60% of what white workers earned in manufacturing counties and 47% of what white workers made in larger, more economically diverse counties. Meanwhile, the poverty rate among Latinos in those six states jumped more than five percentage points to 25.5%.

Over time, these new Americans will have a significant impact on schools, health services, and public policies. Hispanic school-age population grew 322% between 1990 and 2000.

The study takes great pains to point out that Hispanics are not the only reason the South has seen significant population growth since 1990. During that time the number of African Americans in the region grew 21% and the number of whites 11%. Economic growth in the South created an additional 410,000 jobs for Hispanic workers—and 1.9 million jobs for non-Hispanic workers. Still, some observers see this new Pew report as fuel for a backlash against the influx of undocumented immigrants.

Hispanic Population Change In Traditional Settlement States and Six Southern States, 1990-2000

  Number of Hispanics 1990 Number of Hispanics 2000 Change(%)
New Settlement Counties 109,081 613,023 462
Six Southern States 293,445 1,195,800 308
North Carolina 76,726 378,963 394
Arkansas 19,876 86,866 337
Georgia 108,922435,227 300
Tennessee 32,741123,838 278
South Carolina 30,55195,076 211
Alabama 24,62975,830 208
Traditional Settlement States 11,546,271 16,481,592 43
California 7,687,938 10,966,556 43
New York 2,214,026 2,867,583 30
Illinois 904,446 1,530,262 69
New Jersey 739,861 1,117,191 51

Source: Pew Hispanic Center tabulations from 1990 and 2000 Census Summary File 1.

Hispanics need financial education, retirement planning

Latinos save for retirement at half the rate of the general population, according to a study by the Pew Charitable Trusts’ Retirement Security Project and the National Council of La Raza.

That’s an even more dire picture than the 2002 data from Employee Benefits Research Institute (EBRI) paints. EBRI says Hispanics between the ages of 21 and 64 have saved about 68% what whites have saved for retirement ($34,453 vs. $50,117).

Now the Pew study says Hispanic households headed by a person between the ages of 55 to 59 average slightly more than $35,000 in combined 401(k) and IRA savings, compared to $120,000 for the average American household in that same age category. In other words, Hispanics closing in on retirement age have about 29% of what all households have between the ages of 55 and 59.

While differences between the two reports are significant, both suggest Hispanics need financial education. The Pew study says 43% of Hispanic workers describe their personal knowledge of investing or saving for retirement as “knowing nothing.” That’s more than three times higher than other workers.

Indeed, among household heads age 35 to 64, only 28% of Hispanics own stocks, bonds, or other long-term financial assets, compared with 66% of whites, according to another Pew study.

The reports show both a need for financial education and illustrate why it is so important to start saving early for retirement.

Ownership of IRAs and 401(k)-Type Plans
by Workers Ages 21-64
End of Year 2002

  Number (millions) Owned IRA Participated In a 401(k)-Type Plan IRA Balance (average) 401(k)-type plan balance (average)
Race/Ethnicity
White 95.7 23.2 34.6 27,873 35,808
Black 14.2 5.4 23.5 20,688 20,338
Hispanic 15.7 4.9 15.2 15,711 21,481
Other 6.5 16.0 29.3 20,232 34,383

Source: Employee Benefits Research Institute

Ownership of IRAs and 401(k)-Type Plans
by Workers Ages 21-64
End of Year 1996

  Number(millions) Owned IRA Participated In a 401(k)-Type Plan IRA Balance (average) 401(k)-type plan balance (average)
Race/Ethnicity
White 92.2 19.0 27.1 23,640 26,477
Black 12.6 4.7 15.4 10,419 13,025
Hispanic 11.6 4.8 11.2 17,639 16,814
Other 5.1 13.4 21.1 22,625 27,383

Source: Employee Benefits Research Institute

Hispanics show biggest increase in small business ownership

According to a new Census Bureau report, Hispanics own 1.6 million small businesses--a 31% increase from 1997. In addition, they make up the largest small business minority group in the country.

In fact, the increase in Hispanic business ownership mirrors the overall increase in small business ownership from 1997 to 2002—31%. Economists, marketers, and politicians all monitor this Census Bureau report because it is a harbinger about potential shifts in the nation’s economy.

African American small business ownership increased 45% during the five-year period to 1.2 million.

Overall, the number of U.S. businesses grew 10% to 23 million. Minorities owned 18% of the total, a three-percentage point increase from 1997.

Annual revenues at Hispanic-owned businesses rose 22% to an average of $143,866 per company. Contrast that average annual revenue with that for small businesses owned by whites--$417,395. That difference points to the need for minority-owned businesses to get better access to investor capital and other sources of capital.

The survey also reported the number of small businesses owned by women increased 20%.

Hispanics will top first-time mortgage buyers over next decade

Over the next decade, more Latinos will become first-time home buyers than any other ethnic group, according to demographic trends nationwide.

That’s why it is important for credit unions to provide free home buying information. Your topics should include the basics of home buying, the importance of credit records, finding the right home, shopping for a mortgage loan, and identifying which type of mortgage loan best fits the needs of the individual.

Latinos often lack sufficient information about home buying, according to a study last year by the Tomas Rivera Policy Institute at the University of Southern California. While only 13% of Hispanics are actively engaged in buying a home, 44% are planning to buy a home in the next five years.

“Outreach programs can take the fear out of the [home buying] process,” the study says.

CUNA has launched a Seminar in a Box (SIB) series that may be useful to your credit union in reaching this market. In addition to the budgeting seminar, the SIB series has three home buying modules. In addition, CUNA will roll out Spanish versions of its online Anytime Adviser coaches later this year.

Understand that other mortgage providers are targeting this audience, too. The Mortgage Bankers Association has launched a Spanish only Web site dedicated to steering this market to banks.

Don’t let immigration status hold up your mortgage outreach program. At least two out-of-state banks in Phoenix (Banco Popular North America and New South Federal Savings Bank) are offering home mortgages to illegal immigrants, according to the National Association of Hispanic Real Estate Professionals. All immigrants need to qualify for a mortgage loan with an individual taxpayer identification number (TIN) by the Internal Revenue Service, a steady income for at least two years, and a good credit rating.

Of course, no good deed goes unpunished: At least one lawmaker has announced plans to stop mortgage offerings to illegal immigrants.

CUs offer better mortgage alternative than most sub-prime providers

Sub-prime mortgages and FHA loans account for more than 40% of Hispanics’ purchase loans and nearly one-quarter of their refinances, according to a national housing policy analyst.

Janis Bowdler, of the National Council of La Raza, recently completed a study that suggests many Latinos are being steered to more expensive sub-prime and FHA mortgages, even when they have good credit standing.

According to Bowdler, only 18% of non-Latino white families use sub-prime mortgage purchase loans, and less than 10% rely on them for refinancing.

Today, 48% of Hispanics are homeowners, well below the 78% mark of whites. Between 1993 and 2003, the number of Hispanic households grew 92%, and the number of Hispanic homeowners grew 96%, according to Bowdler.

Low homeownership rates are a big reason why the wealth gap between whites and Hispanics is 27 to 1. La Raza is campaigning for H.R. 3045, the Zero Downpayment Pilot Program Act.

Bowdler says many lenders are not reaching out to Hispanics because they do not have the diverse work staff and are not physically present in Latino communities. Credit unions can help this market by ensuring they do not pay too much for their mortgage.

(updated June 14, 2005)

U.S. born Hispanics spur population growth rate

Hispanics accounted for about half the growth in the U.S. population since 2000, according to a Census Bureau report. That’s a faster growth rate than in the 1990s.

In fact, births now surpass immigration as the largest source of Hispanic growth. In July 2004, Hispanics numbered 41.3 million out of a national population of nearly 293.7 million. In the 1990s, they accounted for 40% of the country's population increase. From 2000 to 2004, that figure grew to 49%.

Hispanics tend to be far younger than other U.S. population segments, with half age 27 or younger. By comparison, half of non-Hispanic whites are over age 40 and today’s credit union member is older still, averaging 47 years. Today, one of five children in the U.S. is Hispanic.

The Census Bureau report confirms what many people already suspect, that Hispanics are spreading out beyond states like California, Texas, Florida, and New York. Hispanics now represent 14% of the population, but only 9% of credit union membership.

The Census Bureau data suggests Hispanic population has spread out to many areas of the country, which will have national implications.

In addition to the educational and work force impact Hispanics will have, experts think this population segment will finally become a political force. The Census Bureau recently reported that 47% of Hispanic citizens voted in last year's presidential election, compared with 60% of blacks and 67% of non-Hispanic whites. Experts say fewer Hispanics vote because of two factors: 1. Many are illegal immigrants, and 2. Many come from lower education and income demographic segments.

Down the road, experts predict Hispanic voters will flex their muscle on issues involving children before thinking about issues like Social Security reform. Experts also say Hispanics will not support policies that limit immigration.

Fastest growth in South, for now

Overall, the Hispanic population continues to grow fastest in the South.

That’s one of the items in a 107-page report titled "The U.S. Hispanic Economiy in Transition: Facts, Figures, and Trends" – 2005 Edition from HispanTelligence $185 (https://secure.hbinc.com/product/).

Women represent about half (49%) of the U.S. Hispanic population, according to Census data projections. Overall, Hispanic women represent 13.6% of the U.S. female population. The 20 million Hispanic women will reach 51 million by 2050. The chart from HispanTelligence shows the growth rate.


PC-based remittance programs may pay off

Use of on-line banking applications by foreign-born households in the U.S. will increase more than 30% over the next two years.

That’s the forecast of Celent Communications Inc., whose research suggests higher education and higher income levels of recent immigrants will lead to growing acceptance of such channels as on-line banking.

More than five million foreign-born households in the U.S. will engage in some form of on-line banking by 2007. Celent says 42% of foreign-born households in the U.S. will use some form of online application by 2007, up 10 percentage points over the next two years.

Offering remittance services is a steady, if unspectacular sales tool for El Paso GECU, according to an article in Bank Technology News (May, 2005).

The PC-based service gives users a quick exchange rate status and receipt confirmation within minutes for up to $1,000. GECU serves about 70 members a month with its wire service program. The credit union provides the Vigo Remittance Corp. program, working through the World Council of CUs.

The domestic money transfer market is estimated to be about $66 billion annually and has been dominated by costly commissioned-based providers. In recent years financial centers have been using wire services, stored-value and ATM cards, and online banking to tap into this market.

CU Profile:
Dealerships bring borrowers to CU

Imagine borrowers showing up at your credit union, dealership salesperson in tow and armed with a 25% to 40% down payment on a car.

It has been happening in Columbus, Ohio, where KEMBA Financial CU started its ever-growing Latino outreach-lending program, after an area car dealership started up a Latino sales division, but couldn’t find anyone but KEMBA to handle the financing.

No other lender wanted to take a chance on borrowers with tax ID numbers and no credit history.

KEMBA already offered a successful indirect lending program with area dealers, and it was more than willing to develop a first time borrowers’ program--with one proviso: KEMBA did not want the program to be indirect. After all, under the Aimbridge indirect lending program KEMBA uses, that required a standard 2% reserve with the dealerships. The dealership saw such volume potential that they accepted this restriction without issue.

That wasn’t the only hurdle to overcome, of course. A loan meeting with a first time borrower typically takes more time because there is more education required, and when you combine that with potential language differences it can be very labor intensive. The credit union only has two bilingual staff--one being the vice president of lending--which would have limited the volume of the program if it was dependent solely on the credit union’s ability to provide Spanish-speaking staff.

Overcoming problems is what sales is all about, so those issues didn’t stop the dealership or KEMBA. The dealership’s bilingual sales staff began driving potential borrowers to the credit union and handling the translations, while the credit union’s member service representatives filled out the loan forms and verified international identifications.

"It shows how much the dealership wanted the financing," says Danielle Chatfield, vice president of lending at KEMBA and chair of CUNA’s Hispanic Resource Center Advisory Group.

The program’s success prompted a second area dealership to approach KEMBA to provide financing for its Latino car-buying program. Again, it didn’t matter to the dealership that it was taking its bilingual staff off the floor to drive the customer to the credit union to complete the membership process, loan application, and approval process. In addition, three more auto dealerships have approached KEMBA about opening up Latino sales programs.

All this success has served to exacerbate the credit union’s bilingual staff issue. While having sales staff bring borrowers to the credit union’s branches to handle the loan transactions is very helpful, it is also very labor intensive and time consuming. Lobbies are getting crowded.

"Explaining a loan document to someone who may have never seen a loan document…and explaining what a credit union is and how it differs from other financial institutions, takes a lot of time," Chatfield says.

Census data indicates Ohio has over 217,000 Latino residents, although that actual number is almost certainly higher. KEMBA covers Franklin and Delaware counties in Ohio where the growth in the Latino population is evident.

Ten years ago when Chatfield first worked at KEMBA, no one needed to speak Spanish at the credit union. Three years ago that all changed. There are now two Spanish speaking radio stations and three Spanish language newspapers; the area phone book now includes Spanish Yellow Pages; English as a second language signs are advertised in community churches; businesses are advertising Spanish-speaking staff; and dealerships are starting up Latino sales divisions.

Because the credit union does not want to profile its members, it does not track Hispanic business in its data processing system.

What isn’t optional anymore, however, is hiring bilingual staff. "It’s part of our standard posting process now," Chatfield says. Of course, bilingual staff at area businesses are at a premium. The credit union had two bilingual member service representatives but recently lost one, and fully bilingual replacements are hard to come by.

"We’re looking into pricing information for 24-hour interpreter lines that the rest of our staff could use, plus we’re looking at targeting the Spanish department at local colleges to see whether we can recruit additional bilingual speakers," Chatfield says.

Additionally, KEMBA is taking a second look at whether to take the program indirect. That would allow dealerships to originate and close on site. It would require the ability to place loan-to-value requirements on first-time buyers and it would raise concerns about member identification validation. "Some dealers won’t validate international IDs the way we would," Chatfield says.

The risk-based pricing would have to cover first-time buyer risk as well as the 2% reserve the indirect program requires. "Anecdotally, in the past year we’ve only had to have one Spanish speaking member service representative have to be involved in a repossession, so while we don’t track our Latino loans, I know we’re not having an issue with the majority of those loans," Chatfield says.

KEMBA’s First Time Buyer’s program has a maximum loan-to-value ratio of 85%, and requires stable residence history, stable job history, and money for tax and title. "Those standards are for all first time buyers," Chatfield says. Borrowers with no credit history are risk-based price, usually getting the mid level rate of a three-tier program.

Other Hispanic outreach efforts:

  • Participating in Central Ohio Latino Financial Services Partnership--working with community groups to provide financial education
  • Partnering with local dealerships on customer education days
  • Investigating radio call in show with local Latino radio station
  • Investigating IRnet services once the program becomes web-based

Bank offers new online mortgage product aimed at Latinos

National City Corp and The First American Corp have joined forces to offer a new mortgage product on the MSN Latino web site.

The banks are recognizing the burgeoning Hispanic market, which it expects to expand by 50% in the next five years. The key to the banks’ mortgage program is flexibility on income and credit designed to help borrowers who may have experienced difficulties borrowing for a mortgage. Borrowers may qualify for a loan with no money down or may be allowed to put as little as $500 down toward a 3% down payment. Acceptable sources for closing costs and down payment include gifts from family members, grants, and even a contribution from the seller of up to 6% of the closing costs.

The banks chose to make the program available online because they say Latinos spend more time online than the average non-Latino consumer, with 11.1 million Latinos who regularly use the Internet and spend an average of nearly $2,700 per user online each year. (The Daily Reporter).

Hispanics often targeted

Financial institutions, preferably credit unions, need to open their doors to the Hispanic market, Dr. Juan Hernandez told the Texas CU League’s LoneStarLeaguer.

News that a 23-year old Hispanic male in Florida had been senselessly murdered for the money in his pocket was not surprising to Hernandez, a former cabinet member in the Mexican government and advocate of immigrant rights. Crimes against immigrants are growing, Hernandez said.

"It’s unfortunate, but their (Hispanics) distrust in financial institutions is putting their lives at risk," Hernandez said. Criminals know Hispanics typically carry large sums of cash, and that they fear reporting crime to police either because of their immigration status or their perceptions of police. That makes many Hispanics easy targets, Hernandez said

Hernandez offered several suggestions to reach Hispanics:

  1. Partner with local law enforcement to educate Hispanics on safety issues and the importance of putting their money in a credit union as opposed to their back pockets;

  2. Offer financial education in your local schools. In Hispanic families, particularly those where the parents speak little or no English, children play an important role in family decisions. There are numerous resources available to credit unions. The National Endowment for Financial Education’s High School Financial Planning Program (NEFE HSFPP), for example, is available in English and in Spanish. The Federal Deposit Insurance Corp., which has just launched a national campaign to promote financial education to Hispanic communities across the country, offers the Money Smart curriculum that teaches consumers about budgeting, how to open a checking account and ways to create savings;

  3. Identify and establish relationships with key leaders in the Hispanic community and leverage their influence;

  4. Connect with local outreach organizations and offer workshops, seminars, etc. addressing the benefits of using the financial services of a credit unions, as opposed to the costly check cashers and payday lenders, and Support and sponsor Hispanic-focused festivals, health fairs, celebrations, etc. to increase awareness, build loyalty and trust.

(updated May 24, 2005)

Resource for Hispanic-owned businesses

Hispanic-owned businesses in the U.S. topped two million in 2004, according to a new analysis of U.S. Census data.

Using data from the U.S. Economic Census Survey of Minority-owned Business Enterprises, HispanTelligence found the number of Hispanic-owned businesses grew 76% from 1987 to 1992 and 30% from 1992 to 1997. In 1997, Hispanic-owned businesses in the U.S. topped one million for the first time.

HispanTelligence is offering an 11-page report projecting "Hispanic-Owned Businesses: Growth Projections, 2004-2010," for $85.

Number of Hispanic-owned firms


Benchmark tracks Hispanic business performance

Less than 2% of the private equity capital and fewer than a dozen funds are focused on the Hispanic market, according to an analysis by investment bank Samuel A. Ramirez & Co.

While the U.S. Hispanic market grew more than 14% between 2000 and 2004, compared with 2% for the rest of the U.S. population, the Ramirez Hispanic Index, a benchmark that tracks the performance of the 10 largest publicly traded Hispanic companies in the U.S., rose 24% in 2004. Last year the Dow Jones Industrial Average rose 3% compared with the S&P 500 increase of 9%.

Reaching out to Latinos

AOL Latino, America's Online Hispanic-targeted Internet service, is launching a personal finance channel, Dinero y Exito (Money and Empowerment), to reach out to Hispanics (MediaWeek and New York Times April 11).

The site will feature information on subjects such as retirement, savings, taxes, budgeting, and home ownership. Century 21, Wells Fargo, and Ford Motor Co. are the program sponsors.

Meanwhile, Tu Ciudad (Your City) is the name of a new bimonthly Los Angeles Magazine planning a May 20 launch mailing to 110,000 potential readers. Tu Ciudad will target Hispanics who identify strongly with mainstream American culture as it tries to help advertisers target assimilated Latino consumers. The new launch is backed by Emmis Communications, owners of the Los Angeles and Texas Monthly magazines.

Reaching immigrants won’t be easy; financial literacy efforts may help

Reaching and retaining the Hispanic market--or any immigrant market--is not going to be easy.

According to a recently completed study "Prospects for Immigrant-Native Wealth Assimilation: Evidence from Financial Market Participation" presented at a recent Federal Reserve Bank of Chicago conference, immigrants are less likely to own savings and checking accounts than native- born citizens. Additionally, immigrants are somewhat less likely to open accounts and more likely to close accounts compared to similar native-born individuals.

The research paper is the work of Una Okonkwo Osili (uosili@iupui.edu), at the department of economics Indiana University, and Anna Paulson anna.Paulson@chi.frb.org), Federal Reserve Bank of Chicago. The scholars looked at panel data from the 1996-2000 Survey on Income and Program Participation to analyze saving and checking account ownership decisions of immigrants and native-born individuals.

According to their report, 55% of native-born individuals in the study had a savings account, compared to only 40% of immigrants. There is a similar gap in the percentage of native born and immigrants who own interest-bearing checking accounts: 36% vs. 22%. Additionally, the median wealth level of natives is estimated to be about 2.3 times higher than that of immigrants. The report also suggests that social interactions may play an important role in determining whether immigrants participate in financial markets or not.

Why is this important to know: Today, one out of every nine individuals living in the U.S. was born abroad.

According to their study, a large share of the immigrant gap in financial market participation is driven by education, income, and geographic location, the research suggests. "Immigrants, particularly recent arrivals, have fewer connections with mainstream society and lack information about formal financial markets," the study says. Immigrants residing in ethnically concentrated areas have low levels of English proficiency and higher income uncertainty. So, while immigrants migrate to larger cities where there are other immigrants, they tend to have lower job security and more language barriers in those communities.

"If ethnic concentration mainly affects financial market participation through word-of-mouth learning about mainstream financial services, then financial literacy programs may have large multiplier effects within the immigrant populations," the study says.

Financial Market Participation and Transitions

Savings Account Ownership

 All Natives Immigrants
Own % 52.66% 54.72% 39.72%
Never owned 31.91 30.18 42.80
Ever owned 31.10 30.77 33.24
Entry 5.82 5.92 5.32
Exit 5.15 4.86 7.66
Always owned 36.99% 39.06% 23.96%


Interest-Bearing Checking Account Ownership

 All Natives Immigrants
Own % 34.11% 36.08% 21.74%
Never owned 53.28 51.33 65.60
Ever owned 23.60 23.93 65.60
Entry 3.05 3.15 2.53
Exit 5.25 4.98 8.07
Always owned 23.11% 24.75% 12.82%
Observations 356,769 307,894 48,875

Briefs

Alianza Financiera Hispana is the new CUSO that six Houston area credit unions have formed to advance the financial education, economic condition, and access to financial services for area Hispanics. The collaborating credit unions are Associated CU, Shell FCU, Shared Resources Cu, Space City CU, Houston Postal CU, and Neighborhood FCU. The Houston Postal CU has created a drive around check-cashing service as part of its efforts to reach some of Houston’s Hispanics. The credit union is charging a fee of 1% of the check amount (CU Times 3/23/05 & CU Journal 4/4/05) …

Chocolate Bayou again sponsored its Cinco de Mayo festival. The credit union sponsored its first festival in 2002 and it has grown significantly says Lynette Rambo, vice president of marketing and business development at the credit union. Chocolate Bayou’s Hispanic membership has grown from about 20% of new members to 40%. Details of the credit union’s Hispanic outreach efforts can be found in CUNA’s Hispanic Task Force report …

West Texas CU, El Paso, puts everything it does in both English and Spanish, including newsletters, information services at the credit union, and advertisements. Rufino Carbajal, CEO of the 15,000 member, $41 million credit union, notes about 80% of those living in the Rio Grande valley town are Hispanic (CU Journal, 4/4/05) …

Eastern Financial CU, Miramar, Fla., is preparing itself for the day when Latinos are the majority population in the community. Right now about 30% of the credit union’s membership opt to use Spanish when calling the credit union. In five years, the county will be 80% Hispanic …

The unemployment rate for Hispanics rose to 6.4% in April, according to the U.S. Labor Department. That’s more than one percentage point higher than total U.S. unemployment rate. Observers say a spike in the number of Hispanics entering the work force keyed the change (Hispanic Business Magazine) …

(updated March 31, 2005)

U.S. born Hispanics more likely to use financial services

People learn by doing. So it may not be so surprising that Synergistics Corp. has found that Hispanics born in the U.S. are more likely users of financial services. Experience is a powerful teaching tool .

No one doubts that the Hispanic market represents a major opportunity for financial institutions. And with exposure to U.S. culture and institutions, many Hispanics will become avid users of the products and services provided here.

Synergistics reports that Hispanic consumers born in this country are bigger users of financial services than those born outside the U.S.

Hispanics represent 13% of the U.S. population today (38 million consumers) and will reach 22% by 2050. According to “The Latin Face of America,” an article in the March 13 edition of www.MichNews.com, there are 600 Spanish-language radio stations, magazines, newspapers, and Web sites serving this market.

Between 2000 and 2007, Hispanic purchasing power will grow 89% from $491 billion to $926 billion, according to the Selig Center for Economic Growth at the University of Georgia. Hispanic consumers will spend $700 billion this year.

Synergistics publishes an annual monitor that examines the Hispanic market. For more about its report Hispanic Market Monitor, contact David Smith (dsmith@src-co.com) at Synergistics.

Hispanics see need for financial planning

One of three Hispanic Americans say they need help making financial decisions, according to a study conducted by Roper Public Affairs on behalf of Allianz Life Insurance of North America.

The Roper study identifies similarities and differences among upper-income Hispanic Americans, Asian Americans, and African Americans and how they think and feel about financial planning issues. It targeted individuals between the ages of 45 and 64 with a household income of at least $45,000. Three of four (74%) of Hispanics in that group say they are in control of their finances.

In particular, Hispanic Americans are more likely than other groups to say they need help understanding investing and life insurance options. They consider pursuit of financial education to be very important. When asked what piece of advice they would pass on to their children, Hispanics are more likely to say “educate yourself” than they are to say “stay out of debt.”

Among the significant findings for multicultural Americans were:

  • While self-reliant, they lack confidence in their financial decision-making;
  • Traditional values continue to shape America, and "happiness" remains the primary motivator;
  • Americans are debt-adverse, yet household debt levels continue to rise;
  • Despite feeling successful, middle-class Americans feel unprepared for a financial emergency;
  • Financial concerns focus on issues of aging, including retirement savings, inflation, and healthcare costs;
  • Few respondents believe they can count on Social Security to help fund their retirement and;
  • Leaving a financial legacy for the next generation is important. (www.allianzlife.com/presscenter/pressmulticultural.aspx)

Undocumented Hispanic immigrants increased 10 million last year

Undocumented immigrants to the United States increased 10.3 million last year, according to a new analysis by the Pew Hispanic Center.

In 1990, six states--California, New York, Texas, Illinois, Florida, and New Jersey--accounted for 88% of the undocumented population. Today, those states account for 64% of the nation’s undocumented immigrants. One-quarter of new immigrants settle in California, but states like Arizona and North Carolina are seeing more immigrant population growth. That’s because Arizona and North Carolina have metropolitan areas booming with potential jobs in new construction, new restaurants, and service-oriented businesses.

The population of undocumented residents increased 23% between March of 2000 and March of 2004, the study said. That’s an average increase of 485,000 annually. Pew Hispanic Research puts the undocumented immigrant population in the U.S. at about 11 million. Mexico was the source of the largest group of undocumented immigrants at 5.9 million—about 59% of the total.

Roughly 80% of the new arrivals with Mexican backgrounds since 2000 have proper identification, the Pew study said.

Overall, the foreign-born population, regardless of legal status, is 35.7 million.

Why Hispanics need CU services

Without an account with a local credit union or bank, Hispanic immigrants routinely pay anywhere from 3% to 8% of their weekly income just to cash their payroll checks, says HispanicBusiness.com.

And that doesn’t even factor in the cost to send money home to families in Central and South America.

Without an account at a financial institution it is hard to save money, build credit, and plan for the future.

The Appleseed Foundation www.appleseeds.net estimates that half of the Hispanic immigrants in the U.S. have a bank or credit union account. Since 2003, the Texas Appleseed Foundation has been promoting efforts to help immigrants establish a relationship with a financial institution.

Texas Appleseed, a nonprofit pro bono law and policy center, launched project Finanzas Sin Fronteras to encourage banks and credit unions to become more accessible to immigrant communities. In Texas, less than half the Hispanics have a relationship with a bank or credit union. A recently released Texas Appleseed report identified best practices that can help financial institutions in Texas and around the country earn the business of Mexican immigrants and other unbanked communities.

Some of these are accessible hours and branch locations in non-intimidating locations, such as grocery stores and shopping areas; low-cost accounts, money orders and check cashing; a bilingual staff, Web site, and literature; and a simple account fee structure with intervention on overdraft accounts to reduce fees.

Critical to any effort to serve the Hispanic community is acceptance of the matricula consular as identification to open an account. More than 33 states and 1,180 police departments around the country recognize the matricula as reliable, secure identification that comports with the USA Patriot Act.

Briefs…

Charter Oak FCU, Groton, Conn., has expanded its efforts to reach out to the Hispanic community. The state’s largest credit union has opened up a branch office between two government social service agencies in nearby Willimantic, hired two bilingual staff members, and started offering financial education classes on Tuesday and Wednesday afternoons. The branch’s proximity to Generations Family Health Center and Access Agency will help it reach out to a large and growing Hispanic community. The branch will also offer international money transfer services (The Day/Knight Ridder Feb. 22, 2005)…

Government Employees CU, El Paso, Texas, rolled out a Family Account MasterCard program less than two years ago. The card allows cardholders to share the benefits of card ownership with other family members and provides multiple payment options for the primary cardholder. Hoping to appeal to the strength of families in the Latino culture, the card now has 1,089 family accounts, with an average balance of nearly $1,100 (CU Management, Feb. 2005)…

The credit union share of the remittance market is about 1%, according to an estimate from Pablo de Filippi, project manager of the International Remittance Network (IRnet) program at the World Council of Credit Unions. Banks have a 7% market share. In Texas, about 10% of the 589 affiliated credit unions are doing transfers, according to Linda Webb-Manon,communications director, Texas League. They’re doing about 260 transfers per month (CU Journal, Feb 21, 2005) …

(updated February 25, 2005)

Hispanic Web site gets plug in CU Magazine

The March issue of Credit Union Magazine, with its 30,000-plus subscription base and pass along rate of more than three additional readers per issue, as well as its distribution to every credit union in the U.S, should give this Web site some much needed visibility.

Here’s what the magazine reported:

Resources on how to launch, expand, or improve services to Hispanic members are available on CUNA's Web site. You'll find:

  • The final report of CUNA's 2004 Hispanic Advisory Task Force, with survey results of credit union activities and plans for serving this market.
  • Links to research about the Hispanic market, including a report from the Pew Hispanic Center and the Tomas Rivera Policy Institute's study on the home ownership potential of Mexican-heritage families.
  • Biweekly Hispanic news updates and stories that spotlight mainstream credit unions reaching out to serve Hispanics and credit unions focusing solely on that market.
  • An e-mail list so credit unions can share their questions and answers about serving Hispanics.
  • A file resource library enabling credit unions and leagues to post information.
  • Products and services available from CUNA to help credit unions serve this market.

The Web site is an initiative of CUNA's Hispanic Resource Center Advisory Board. "The board's goals are to oversee development and expansion of the Web site and to make Hispanics more aware of credit unions as providers of their financial service needs," notes Danielle Chatfield, advisory board chair and vice president, lending, Kemba Financial Credit Union, Columbus, Ohio.

If you have resources to add, visit the Hispanic Resource Center on CUNA's Web site, select "Resource File Library," and follow the upload directions. Send news items to jhanson@cuna.com.

CSSI: Reaching out to the Hispanic market

Like many providers serving credit unions and their members, CUNA’s Strategic Alliance Inc. (CSSI) offers a variety of products and services for the Hispanic market.

Here are some of the Hispanic outreach efforts that CUNA Strategic Services has undertaken:

  • A calendar program that features calendars targeted to the Hispanic market;
  • The IRnet wire transfer program offered through the Travelex Worldwide Money Limited product and the World Council of CU’s Vigo product;
  • Automated teller machines and self-service solutions with options for displays in Spanish through Diebold;
  • Spanish marketing materials and bilingual checks through Harland;
  • Customized member forms and e-forms in Spanish from Standard Register;
  • Spanish marketing materials for money orders from Travelers Express MoneyGram; and
  • Spanish marketing materials to promote traveler’s checks and travel-related financial products from Travelex.

Hispanic purchasing power rising

Hispanic purchasing power is now projected to reach nearly $1 trillion by 2010, according to new estimates by HispanTelligence. The rate of growth is nearly three times the overall national rate over the past decade.

Marketing to Hispanics up 11%

Advertisers spent nearly $3.1 billion in 2004 to market their products and services to Hispanics in the U.S., an 11% increase from the previous year, says HispanTelligence research. By 2007 Hispanic marketing expenditures will increase to more than $3.6 billion.

Only 19% of Fortune 100 offer Spanish voice response

To reach the Hispanic market your interactive voice response systems need to have a Spanish- language option, your call centers should have Spanish speaking agents, and your Web site needs a clear link to content in Spanish. That’s the view of Ron Rogowski, an analyst at Forrester Research Inc. Unfortunately, only 19 of Fortune’s top 100 companies even offer Spanish-language content on their U.S. Web sites.

Nickelodeon plans 10-city tour for Latin-American exhibit

Nickelodeon recently announced a 10-city mall tour allowing kids to see the interactive bilingual home of Dora the Explorer in “La Casa de Dora” a 2,000-square-foot, Latin American- inspired exhibit. The tour started in Denver last week and will travel to Chicago, Dallas, Houston, Los Angeles, Miami, New York, Phoenix, Albuquerque, N.M., and San Francisco.

Hispanic population in Idaho growing

Mexican immigrants are moving to Idaho. So says Hispanicbusiness.com. The reason: Idaho ranks in the top 10 states for job creation. Data from the U.S. Census Bureau indicate that Idaho’s Hispanic population has grown by 92% since 1990 and now stands at more than 100,000, representing 8% of the state’s residents. Many of the Hispanic immigrants are moving to Idaho to work in the farm sector.

(updated January 31, 2005)

CU offers bilingual banking services

Eastern Financial Florida CU offers award-winning marketing and bilingual member service to its members.

The Latino Business Club of America recently named Eastern Financial Florida the "company of the year."

As a press release notes on the credit union’s Web site, the credit union "doesn’t need a current census report to tell it the importance of the Hispanic market in South Florida and Tampa." Perhaps that’s why you’ll hear Spanish spoken at any of the 19 branches and at its Service Center.

Last year, the $1.8 billion credit union launched "Eastern Online en Español," its online banking service for Spanish speaking members.

Mercedes Hannabergh, the credit union’s Latino Community Development Officer, estimates the credit union’s field of membership is between 40% and 50% Hispanic. The credit union has been making a concerted effort to tap this market for the past three or four years. By 2010, Hannabergh says, Hispanics will be the largest demographic group in Eastern Financial’s market.

The credit union has translated almost all of its marketing materials into Spanish and has a significant portion of its web site in Spanish. Its call center is also bilingual, an effort that began last year. The credit union has several new initiatives planned for 2005: 1) Launching a business outreach effort promoting small business development at the branch offices; 2) teaching financial education among high schools in the community; 3) writing editorials for local newspapers that educate the market about the differences between credit unions and banks, as well as personal finance fundamentals like car-buying vs. car-leasing.

Home ownership offers key to affluence

The way out of poverty is home ownership. That’s always been John Herrera’s view. And that’s a big reason his credit union, last year, sought and received regulatory approval to offer 30-year mortgages.

Now, here’s some data from a number of places to support the viewpoint of the chairman and co- founder of Latino Community CU, Durham, N.C.--that home ownership is the best path out of poverty and toward affluence. Obviously, many Hispanics share Herrera’s viewpoint.

Nearly half of U.S. Hispanic households own their homes, up from two of five households just a decade ago. HispanTelligence, the research division of Hispanic Business, reports. According to its research, home ownership among U.S. Hispanics rose from 41% to 49% between 1994 and 2004 and will climb to 53% by 2012.

Not surprisingly, the number of home equity loans this market is using also is on the rise. And many observers believe Hispanics are using home equity loans to finance small businesses. From 1993 to 2001, the percentage of home equity loans granted to Hispanics rose from 4% to 5.3%, says SMR Research Corp., in Hackettstown, N.J.

A Southern California survey by the Community Development Technologies Center suggests that home equity loans are among the three most commonly used sources of business self-financing. While credit cards and personal loans are the top two sources of business self-financings, home equity loans are the third most commonly used source for funding.

Gary Acosta, chairman of the National Association of Hispanic Real Estate Professionals, says it is faster, easier, and cheaper for Hispanics to get home equity credit, rather than standard business loans. He says 62% of his organization’s members report investing at least a portion of their home equity into their own professional practice.

New mortgage program for immigrants

Ever mindful of the demographics and business potential, banks are reaching out to serve the Hispanic market.

Among the latest to expand its offerings is Fifth Third Bancorp, which recently introduced a new mortgage loan program for immigrant, tax-paying U.S. residents.

The Fifth Third Immigrant Homeownership Loan program offers a 30-year fixed and five- or three- year adjustable rate mortgages. The program boasts it is offering expanded forms of acceptable identification sources, broader income sources, and nontraditional credit references. Applicants can apply with an IRS issued Individual Tax Identification Number (ITIN) and any government-issued photo identification (driver’s license) rather than a Social Security number.

The program is operational in seven Midwestern metropolitan areas. About 12% of the 33.5 million foreign-born residents live in the Midwest. Immigrant residency in the Midwest is up more than 50% since 1999 (hispanicbusiness.com).

Credit card scam targets Hispanics

United Press International reports the Illinois attorney general is suing two Florida companies for scamming Latinos.

Latin Card Plus LLC and Pro Line Card LLC did not reveal consumers had to pay up to $399 in advance for credit cards good only to buy products purchased from the company’s own catalogs.

Attorney General Lisa Madigan accused the two companies of targeting Hispanics. Ads for the credit cards claimed they could help Latinos who had difficulty sending money to relatives in Mexico get credit cards with credit lines from between $2,000 and $7,500 (UPI).

More demographics about Hispanics

Some demographic errata from the Conference Board’s Consumer Research Center and HispanTeligence:

  • The Mexican community is the largest Hispanic demographic group in the U.S., making up 6.5 million households. More than 80% of these households are in the Pacific, West, and South Central regions of the country. By 2010 there will be more than 8.5 million households, with 45% of these households headed by someone age 45 or younger. More than 55% of these households include children under age 18--one good reason to reach out with a youth program. Another good reason: Hispanics respond to membership and community programs.
  • Central and South American households in the U.S. number 1.6 million… Puerto Rican households in the U.S. number 1.2 million…Cuban households number 511,000. Better than four of 10 households in these market segments are headed by someone age 45 or younger.
  • Hispanics contribute about 10% or $55.5 billion of the New York designated market area’s total aggregated household income. Nearly one-tenth of New York Hispanic households have yearly incomes of $100,000 or more, while only 7.6% of Hispanic households across the country earn above that income threshold.

(updated January 18, 2005)

Remittances

The amount of money that Mexicans living in the U.S. sent home to relatives during the first 11 months of 2004 surpassed the figure for all of 2003 by nearly 25%. At the end of November 2004, immigrants in the U.S. had sent home $15.17 billion, compared with $13.39 billion for all of 2003. More than 10 million Mexican citizens reside in the U.S., about one-tenth of Mexico’s entire population. These numbers help explain why Wells Fargo Bank opened up an office in Arizona that specializes in serving Mexican investors. The Federal Reserve Bank in Washington, D.C., says the number of U.S. banks in the border region of the U.S. has doubled over the past 10 years (Hispanicbusiness.com)…

Another player in the wire transfer business

The U.S. Postal Service has expanded its reach to Latin America and the Caribbean. The service has been available in Mexico since 1996. It is called Sure Money or Dinero Seguro. CUNA & Affiliates offers credit unions very competitive wire service rates, the program is called IRnet and offers both a Vigo and Travelex product line…

How Hispanics see themselves

Don’t think the Hispanic market is diverse? In a study of 2000 Census Bureau data, Pew Hispanic Center researcher Sonya Tofoya found 48% of Hispanics identify themselves as white, while 42% see themselves as “some other race.” In Texas, 63% of U.S. born Latinos identified themselves as white. In California, only 45% of native-born Latinos said they are white. Those who are more educated, affluent, and who see themselves as Americans are also more likely to view themselves as white. The Fort Worth Star Telegram (1/9/05) notes that more than nine million Latinos of Mexican heritage were not comfortable with the white identity. That means half of the growing Hispanic market in the U.S. is feeling left out, the newspaper said. “The challenge for Mexican-Americans is to recognize that racial perception is not about the color of one’s skin. It’s about reconciling their aspirations as Latinos with the “white” behaviors that lead to success in America…

English vs. Spanish: Which will prevail?

English is the language of choice among second and third-generation of Hispanic immigrants. So says a study from researchers at State University of New York at Albany. Looking at 2000 Census data found most Hispanic-Americans were moving steadily toward using English as their primary language. The report found 72% of Hispanic children who were third-generation or later spoke English exclusively. In 1990, 64% of third- and later-generation Mexican-American children spoke only English at home. By 2000, that figure had risen to 71%. One caveat: More Hispanics maintained their bilingualism into the third generation than did earlier European counterparts, especially in communities along the Mexican border and among Dominican immigrants who maintain close ties to their home country. In 2003, about 33 million foreign-born people lived in the U.S. They represent 12% of the population and 53% of those immigrants were born in Latin America, with half having arrived since 1990. Some observers believe these latest immigrants will be more likely than previous generations to hold onto the Spanish language (Hispanicbusiness.com)…

Financial education efforts need improvement

The financial education programs many financial institutions, government agencies, and community groups offer are not effectively serving the needs of the Hispanic market, according to the National Council of La Raza, an umbrella group for Hispanic community organizations. Low-income people, particularly Hispanic immigrants, are not getting the same type of individual financial counseling that middle-and upper-income people receive, according to the La Raza group, Washington, D.C. While classroom-based programs have been marginally successful, individual counseling programs offer much better opportunities (American Banker 12/14/04)…

Market for business lending

Latinos were one of three groups that increasingly jumped into the market of self-employment, according to a study by the Advocacy Office of the U.S. Small Business Administration. Last year 1.3 million Hispanics reported that they were self-employed, compared to 241,000 in 1979. That fourfold jump was sparked by the increase in the Latino population, says the study. Total self- employment (a legally incorporated business with no more than one employee and an owner not working at another job) reached 12.2 million people in the U.S. in 2003, up from 716,000 in 2000. In that same time frame, the self-employment rate for women grew by 7% to 3.8 million. African- Americans achieved their highest self-employment in 2003 reaching 710,000, up 2%. The number of self-employed Asian-Americans rose 26% to 590,000 (Hispanicbusiness.com)…

Tax preparation service may help

Thinking of reaching out to the Hispanic market in your community? They need help with tax preparation services. Tax preparation offices are often lacking in bilingual staffing, detailed knowledge of ITIN filing, and have trouble with issues pertaining to multiple names or invalid Social Security numbers. Out of the 39.9 million Hispanics living in the U.S., nearly half the adults are foreign born. Many are unaware that they can and should file taxes and that doing so may help them become users of your credit union’s services. A publication for you to consider, according to PR Newswire: “Marketing to Hispanics: A Comprehensive Guide for Tax Preparation Offices” from TRC Publishing ($89 available at www.trainingresourceclinic.com)…

Multicultural marketing from the Big Three Automakers

Even Detroit’s trying to cash in on the Hispanic market. GM, Ford, and Chrysler have all announced plans to offer multicultural marketing campaigns, says Hispanic Business magazine. Combined, the Big Three spent $148 million in Hispanic-oriented media in 2002, up 10% for a year earlier and a tenfold increase from a decade ago. Texas research firm Intellous says new vehicle spending among Hispanics grew 82% to more than $16 billion between 1997 and 2001. The Hispanic share of the overall American new vehicle market rose from 4.5% to 6.3% during that time frame. Hispanics spent nearly $35 billion in 2002 on new and used vehicles and repairs, nearly 8% of the market according to HispanTelligence, a division of Hispanic Business. By 2020, Hispanics’ share of the auto market could grow to 13%, says J.D. Power. The light-truck segment of the vehicle market grew nearly 34% during that time frame, Intellous says.

Hispanic Automotive Expenditures
Year New Purchases Used Repairs Total Market Share
2000 $10.2 $19.6 $5.06 $34.9 7.97%
2001 $13.8 $18.0 $5.28 $37.4 8.13%
2002 $10.9 $18.8 $4.86 $34.5 7.40%

Source: HispanTelligence based on Bureau of Labor Statistics Consumer Expenditure Survey, 2002

Hispanics expanding economic clout

Over the next decade, Hispanic households in the U.S. will significantly increase their numbers and economic clout, says the Conference Board. The number of Hispanic households will increase from 10 million plus to 13.5 billion by 2010. These households will hold $670 billion in personal income by then, with Mexican-American households accounting for $409 of the total (source: hispanicbusiness.com)…

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