New research by CUNA examines the performance of credit unions that expand their Hispanic/Latinx outreach efforts.
Specifically, CUNA conducted a rigorous evaluation of the effect of participation in Coopera’s Hispanic Outreach Program and Inclusiv’s Juntos Avanzamos designation on credit union performance.
Because some fear that serving this population could have a negative impact on asset quality, CUNA’s evaluation included an examination of how participation in either initiative affects asset quality.
CUNA’s evaluation includes a regression analysis that uses a “difference-in-differences” approach. This approach separately compares credit unions that participated in Coopera’s Hispanic Outreach Program or those that received the Juntos Avanzamos Designation to other credit unions that did not.
The model attempts to account for important differences between credit unions that might also influence outcomes such as asset size, technology, and location. The model also controls for fluctuations in unemployment and economic growth and changes in regulations.
CUNA finds that credit unions that joined Coopera’s Hispanic Outreach Program grew their memberships by 33% more than credit unions that did not join. These credit unions also experienced 44% and 31% higher increases in loans and assets, respectively, and 0.32% greater earnings.
To a much weaker extent, portfolio quality—as measured by delinquency and charge-off ratios—shows improvement for credit unions that participated in Coopera’s Hispanic Outreach Program relative to those that did not.
CUNA conducted similar research on credit unions that receive the Juntos Avanzamos designation and the results were similar.
Credit unions that joined Juntos Avanzamos grew their memberships 28.1% more than credit unions that did not join. They also experienced 39.9% and 26.4% higher increases in loans and assets, respectively. However, CUNA finds no statistically significant increase in earnings.
The evaluation also finds no statistically significant differences in portfolio quality for credit unions that joined Juntos Avanzamos relative to those that did not. The results of both evaluations indicate that both initiatives may help grow credit unions’ memberships, loans, and assets without harming portfolio quality.
One caution when interpreting the evaluation results: they do not represent annual growth rates. Instead, the results represent an overall increase for all periods after credit unions participate in Coopera’s Hispanic Outreach Program or receive the Juntos Avanzamos designation relative to before.
Fed data shows there is an opportunity for credit unions to do a better job of reaching and serving the Hispanic/Latinx community. CUNA’s research confirms that membership diversification leads to better performance.
Programs like Coopera’s Hispanic Outreach Program and Inclusiv’s Juntos Avanzamos designation are important examples of how being intentional about using a DEI approach to diversify membership can mean a win-win-win for credit unions, members, and communities.
SAMIRA SALEM is vice president of diversity, equity, and inclusion for Credit Union National Association.
Through its Hispanic Outreach Program, Coopera partners with credit unions and other organizations to unveil the growth potential of underserved multicultural markets with a focus on the Latino market. Using proprietary analytics tools, Coopera helps these organizations to shape a holistic strategy for growth and service to underserved communities.
Juntos Avanzamos (“together we advance”) is a designation for credit unions committed to serving and empowering Hispanic and immigrant consumers by helping them navigate the U.S. financial system and providing safe, affordable, and relevant financial services. To be eligible for the designation credit unions must meet a set of criteria for best practices.
These include, for example, whether credit unions employ bilingual, culturally competent staff and leadership; accept alternative forms of ID for account opening purposes; use flexible loan underwriting criteria; and treat all members with respect regardless of immigration status.
Inclusiv is leading the national expansion of Juntos Avanzamos in partnership with the National Association of Latino Credit Unions and Professionals (NLCUP), Coopera, the Cornerstone Credit Union League, and a growing number of state leagues and associations across the country.