Credit Union banking on East Palo Alto

San Mateo Credit Union has a long history of community service

When San Mateo Credit Union opens a branch in East Palo Alto at the end of this year, residents will get a financial institution with experience serving low-income communities with high immigrant populations, Stephen Tabler, vice president of marketing, said.

East Palo Alto residents learned in June that their only bank, California Bank & Trust, would close its branch on Aug. 26 as part of a consolidating effort. Predatory-lending foes begged the bank to stay, saying its departure would push many residents back to unscrupulous mortgage brokers and "payday" lenders who charge exorbitant fees for services. But bank officials said there weren't enough accounts to justify staying.

San Mateo Credit Union officials, however, said they have had an eye on East Palo Alto for 10 years and they've learned much from serving the North Fair Oaks community in Redwood City, which is made up largely of Latino residents and lacks banking experience.

San Mateo Credit Union is a nonprofit organization and its core clients are county employees. But the credit union's membership is open to the general public and offers many of the same services of larger, for-profit banks at lower interest rates, Tabler said.

The credit union's board of directors began asking staff in October 2010 to look for opportunities because the country seemed to be coming out of the recession, Tabler said. Board members wanted the credit union to be ready for opportunities.

"We did a research study in 52 zip codes in the Bay Area and evaluated overall opportunities in credit lending and auto lending," he said.

Community Legal Services in East Palo Alto, which litigates against predatory lending and offers residents financial-literacy education, invited the credit union to consider opening a branch. Credit union officials looked at their data for the top 10 zip codes with potential for auto lending and decided the city would be a good bet, Tabler said.

"Based on our experiences with the branch in North Fair Oaks, we believe that we can really make an impact," he said.

The credit union can offer small-dollar loans that traditional banks don't offer and low-interest vehicle loans, Tabler said.

"Staffing is the biggest challenge. We've opened three new branches in the last five years. You need the right manager who understands the culture of the community," he said.

The decision came quickly, within four to six weeks. The credit union signed a lease in July and is scheduled to open in the fourth quarter of the year, he said. Much depends on when California Bank vacates the premises, he added.

Keith Ogden, staff attorney with Community Legal Services' anti-predatory lending and foreclosure-prevention program, said his organization is working with the credit union to create products that will best serve East Palo Alto residents.

Credit unions provide real opportunities for working with communities that aren't usually available with traditional banks, he said.

"The credit union model is based on this idea that the members are members of a community and collectively the work to help each other out," he said.

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Like this comment
Posted by Observer
a resident of Another Palo Alto neighborhood
on Aug 13, 2011 at 8:33 am

Shouldn't this headline have read: "East Palo Alto banking on Credit Union"?

The last article on EPA losing its only bank seemed to point out that the "community" needed a bank, and that various "leaders" were going to be working with other banks/credit unions to come into town to fill the gap of the exiting bank. This article seems to have a totally different point-of-view .. given that the last bank effectively "gave up" on EPA because it did not have enough business to keep the branch open.

EPA's continuing problems call into question the wisdom of having small pockets of people create municipalities that are too small to be self-sufficient. The San Mateo LAFCO claims that the mindset of California government is to encourage small city formation, but the costs, and complexities, of running small cities is overwhelming--calling into question the correctness of allowing small cities to exist.

It's hard to believe that EPA is better off now than it was when it was a part of unincorporated San Mateo County.

Like this comment
Posted by YIMBY
a resident of University South
on Aug 15, 2011 at 6:24 pm

YIMBY is a registered user.

Kudos to SMCU - they deserve much praise for going where banks won't go - and doing what banks are truly intended to do - serve the community.

Like this comment
Posted by musical
a resident of Palo Verde
on Aug 15, 2011 at 7:47 pm

EPA is 11th in population of SM County's 20 incorporated municipalities about the same size as San Carlos or Burlingame.

Like this comment
Posted by Hmmm
a resident of Atherton
on Aug 16, 2011 at 2:36 pm

How does Observer know what makes EPA better off? This community is much better than it was when we were the neglected stepchild of SM County. We have a long way to go, but we've made a lot of progress. In the main, we have locals in positions of responsibility & we hold them accountable. They're our neighbors, they're tenants, local businesspeople and community leaders. Even some of the cops have been residents. We know where the buck stops & when we don't, it's easier to find out.

Like this comment
Posted by SupMar
a resident of another community
on Aug 18, 2011 at 11:57 am

I work in the payday loan industry and the term "predatory lending" is often used incorrectly to describe sub-prime financial services, including payday advances. The definition of "predatory lending" is unclear, but even when looking at the range of definitions available, payday loans do notmeet the criteria of "predatory lending."

Like this comment
Posted by Pawngirl
a resident of another community
on Aug 23, 2011 at 4:07 am

"Predatory lending" "Exorbitant fees" As a member of the payday loan industry, I think this is offensive. The business I work for charges $15 on a $100 2-4 week loan. I think this is very reasonable compared the a bank overdraft fee, late fee or credit card fee that most people would charge.

Sorry, but further commenting on this topic has been closed.

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