The CU Model Works, Pure and Simple

It can be helpful to look back at CUs' humble beginnings.

January 1, 2012

As today’s credit unions gain exposure as alternatives to big banks, it can be helpful to look back at their humble beginnings. Here, Sandy Lingerfelt, president/CEO of $67.7 million asset Clinchfield Credit Union, Erwin, Tenn., shares memories from the start of her credit union career.

In 1974, I was a young stay-at-home mom with a three-month-old baby and a husband who was busy with railroad work and coaching. At a family dinner with my in-laws, I mentioned I was bored and needed a part-time job. I haven’t had a moment’s boredom since!

My brother–in-law was plant manager at the local casket plant, and chairman of the credit union there. He called two days later and asked if I’d like to write checks at the credit union a couple of days a week.

I didn’t have a clue what a credit union was. And I walked into an absolute mess: Two state examiners were in the office, they had fired the manager, and they were catching up on the book work. The manager had let everything go for six months.

I stayed the rest of that week...and I’ve loved it ever since. During the early days, I was paid $65 a month.

By the time I did the book work at home on my kitchen table and kept the office open a couple of afternoons a week, I made about 25 cents an hour. It was purely a labor of love, and I probably would have paid them to let me do the job.

No cash; only checks

The largest loan we made with our original field of membership was $400. But that $400 meant a lot to our members. They needed it to buy groceries for their families, to pay insurance and taxes, to buy school clothes, or even to make house or car payments.

One member knew I calculated and posted all loan payments on the last day of the month. She’d routinely visit my office and ring her hands until I finished posting her payment.

Then she’d ask me to complete loan papers so she could borrow back the $25 she had just paid. She depended on it as a source of income.

Back then, we didn’t handle cash; we only wrote checks. Often I’d be at the grocery store and a member would ask if I had the checkbook with me. I’d go out to my car, open the trunk, write a check, post it, and balance before I ever left the store.

Fortunately, our members’ needs have changed and we no longer have to carry around the general ledger and the checkbook in the trunk of the car.

Last summer, we sponsored our first “community shred” day. I asked a member if we were treating him OK. He said, “Of course.” Since we had just lowered our mortgage rates, I asked if he had his mortgage with us. He said he had his car loan with us but that we probably wouldn’t handle his mortgage.

I asked him why not. He explained his wife had been very sick for a few months and had missed work.

She was now OK and back at work, but they were behind on their mortgage payments and the bank was threatening to foreclose on their mortgage. They were making payments but couldn’t catch up on the missed ones. He had always had excellent credit before the sickness.

I asked the member to visit the credit union and we would see what we could do. Fortunately, we were able to lend him the money to catch up on the house payments. Then we started the process to move the mortgage to the credit union.

At their closing, his wife said, “Now I guess he’s happy I made him take our stuff to the shredding that day!”

The ‘bad luck’ kid

Another member is the “bad luck” kid. If it weren’t for bad luck, he truly wouldn’t have any luck at all.

We helped him through his first divorce which was very messy. The wife left him with lots of debt, but he was fortunate to end up with custody of his son. He’s a very good father.

He recently left me a voice mail, sobbing, and saying he couldn’t make ends meet. He had bill collectors from cash companies calling him and harassing him at work and he was afraid he was going to lose his job. Wife No. 2 had left him with bills to pay and she took her paycheck.

Long story short, we loaned him the money to pay off the cash company bills with a payment he can afford. He’s turned things around enough that he will soon take out an auto loan at the credit union to replace an aging vehicle.

These examples illustrate how credit unions are a needed alternative to for-profit banks.

What has impressed me most from the beginning through today is that when one member saves and another member borrows, they share in the profits. It works, pure and simple, and makes a huge difference in members’ lives.

Members need us now, as they did at the beginning, to assist with financial needs when loved ones are sick, members lose jobs, or they simply need help to save and borrow wisely.

Life is good in credit union land. “People helping people” stories happen at every credit union on a daily basis.

We’re all about taking care of members because they are, of course, our member/owners.