Serving an island community, one member at a time

When the lights go out in the U.S. Virgin Islands, which happens sometimes for days at a time, Keisha L. Richards starts thinking about loans.

As CEO of St. Thomas Federal Credit Union , Richards is already working with her board to develop a lending program that would help members finance solar panels, generators, and battery backup systems. It is one of the more unusual product development conversations happening in the credit union world right now. It is also a completely logical one, given where she works.

"We have a troubled power grid in the VI," Richards said. "And my board is adamant right now that I need to find a lending facility that would help our membership to be able to do solar, generators, battery backup systems, whatever it's going to take to help our membership."

That instinct, to observe a community need and build a product around it, is the credit union difference in practice. And at St. Thomas FCU, it plays out in ways that most mainland credit unions will never have to imagine.

A community unlike any other

The U.S. Virgin Islands sit about 1,100 miles southeast of Miami, comprising three main islands (St. Thomas, St. Croix, and St. John) and dozens of smaller ones, with a total population of roughly 85,000. Richards describes the territory as a melting pot of Caribbean cultures, languages, and traditions.

"We have a diverse community," she said. "It's like a melting pot of the Caribbean. We do have a lot of transient persons that relocate from other Caribbean islands here. So we're a mixture of cultures and different religions, and we have just a little bit of everything."

Founded on July 17, 1952, St. Thomas FCU began as a credit union for government employees and has expanded its charter over the years to include businesses located on St. Thomas or St. John with two or more employees, as well as immediate family members and household members of existing members. Today, it serves approximately 9,000 members and holds roughly $90 million in assets.

Richards points to the credit union's unusual membership dynamics as an asset. Because the entire island community is so close-knit, she said, delinquencies run significantly lower than among mainland peers. "Everyone knows everybody's name. They know where they live," she said. "So if there's an issue, more than likely, we already know what it is because the community is so small."

The isolation problem

Operating in a U.S. territory rather than one of the 50 states creates a category of operational challenge that is largely invisible to mainland credit union leaders.

Shared branching networks that mainland credit unions access as a matter of course simply do not extend to the Virgin Islands. Running debit cards requires a Latin Caribbean license rather than a standard continental U.S. license, a significantly more expensive credential that St. Thomas FCU, at its asset size, cannot obtain directly through Visa or Mastercard. The credit union instead depends on a sponsoring institution with that license and finding one willing and able to do so is an ongoing challenge.

"A lot of the resources readily available to other mainland credit unions don't necessarily filter this way," Richards said.

Vendors present a similar problem. Richards described recurring conversations in which a product or service looks promising right up until the moment a vendor discovers it cannot be delivered outside the continental United States.

"A lot of times we would talk to vendors, and they have awesome services that we would love to offer to our members," she said. "But unfortunately, by the time we get deep into conversations, it's, 'Oh no, we're not able to do that because we can't offer those services outside of the continental U.S.'"

The credit union has responded by building solutions from scratch when necessary. An internally developed credit card program is scheduled to launch by the end of the summer. Richards credits two key vendor partners, TransFund and CU*South (the credit union's core processor), for their willingness to create workarounds and exceptions that have kept St. Thomas FCU competitive.

Reaching St. John without a branch

St. John, the smallest of the main islands, sits a 15-to-20-minute ferry ride from St. Thomas on a calm day. Building and staffing a full branch was not financially viable for a credit union of St. Thomas FCU's size. So Richards found another way.

The credit union installed an interactive teller machine, or ITM, on St. John. Members can now withdraw and deposit cash, deposit checks, and handle basic transactions on the island without making the trip across the water.

"It was not cost-effective for us to do a full-fledged branch on St. John, but we implemented an ITM that gives our St. John community the opportunity to withdraw cash," Richards said. "They can do cash deposits, they can do check deposits, (and the ITM) gives them that opportunity to not necessarily have to catch the boat to St. Thomas to do basic transactions."

When the hurricanes came

In September 2017, two Category 5 hurricanes struck the Virgin Islands within two weeks of each other. The islands were devastated. Power was out across the territory. Internet was gone. Structural damage was everywhere, including to St. Thomas FCU's own building.

St. Thomas FCU was conducting transactions manually for members who needed help days after the storms, before the islands had power restored, before internet service returned, and before most major banks had begun to figure out how to reopen.

"Our building was partially damaged," Richards recalled. "It took us maybe about a day and a half to get the building to a point where we would not utilize the top floor of the building. We would only be able to use the bottom floor." Despite having no power and no internet, she said, members began arriving to do transactions within four days. "Most of the major banks here in the VI, it took them quite some time to be up and running," Richards said.

Fellow credit unions sent food and supplies. One credit union and its core processor provided emergency cash. St. Thomas FCU used those funds to provide hot meals for members who came to the branch.

"We took that cash, and we had warm meals for our membership for a few days. They would come in, give us their member number, and we were able to give them warm meals, like full plates of food," Richards said. "And I think that built a different level of trust in the community for us. Because in that major time of need, we're always there to support them."

The recovery effort earned St. Thomas FCU a national credit union industry award for credit unions under $250 million in assets.

Meeting members where they are

The credit union difference also shows up in who St. Thomas FCU is willing to lend to.

Richards is frank about the fact that a significant portion of the credit union's loan portfolio falls in the D and E credit-grade range, a tier that many financial institutions decline or avoid entirely. She is equally direct about why the credit union serves them anyway.

"A lot of credit unions would take more caution with D and E grade paper members, but that's what a lot of our community is, and we don't isolate them and say, 'Hey, we can't do anything for you,'" she said. "We try to find ways to help them. So yes, we do have a lot of D and E grade papers on our books, but those members pay their loan and they're utterly grateful that we give them that opportunity, even though they don't have the best credit to be able to get back on their feet."

When circumstances demand it, the credit union activates a relief loan program offering loans of up to $3,000 with no credit check, requiring only demonstrated ability to repay. The program has been deployed during COVID-19, federal government shutdowns for federal employees, and other community hardships. Richards said no other institution on the islands offers a comparable program without requiring collateral or a full credit review.

Looking out for seniors

A significant share of St. Thomas FCU's membership is older adults, and Richards has made their well-being a deliberate focus of the credit union's community programming.

During International Credit Union Week last October, the credit union hosted a senior day for members 60 and older. Staff from the IT team ran a technology session, walking attendees through how to use features on their phones, download apps, and practice safer password habits. There was an ice cream truck. Members who had not seen each other in months reconnected.

"Most of them did not want to leave," Richards said, "and that was a good opportunity for them to catch up with their peers who they may not have been able to see in a while because, you know, they're seniors now, they may not be driving anymore. So they're dependent on someone to take them around."

Richards has also facilitated a series of elder financial abuse and exploitation workshops, as well as a fraud and identity theft workshop held this past March that drew approximately 100 attendees, most of them seniors.

"Someone is looking out for them," she said. "Our community, they're not completely forgotten because in a lot of communities, seniors are the forgotten segment of the population."

The chief lending manager, Denise Stuart, conducts individual financial coaching sessions with members who come in to apply for a loan and are denied. Rather than simply sending an adverse action notice, Stewart sits with members, explains the reasons for the decision, and maps out steps the member can take to improve their position.

The credit union holds at least three financial literacy and community education workshops annually. A financial literacy workshop is scheduled for June 10.

Seventy-four years of resilience

A credit union founded in 1952 by a group of local government employees has survived two catastrophic hurricanes, a global pandemic, recurring power grid failures, and the persistent disadvantages of operating in a territory that mainland financial infrastructure tends to overlook. Richards attributes the longevity to something simpler.

"I think a lot of it is resilience and perseverance," she said. "We have our employees, our board, our committees. They are dedicated to the very end." Her members, she added, share that commitment. "Our people truly appreciate what we do."

The credit union's capital ratio currently exceeds 20%, a figure that reflects the depth of member loyalty as much as it does financial management. Members who receive Carnival loans each spring, up to $3,000 to cover costumes and festivities for the territory's signature annual celebration, come back to pay them off and do it again the following year. Members who were served hot meals after a hurricane in 2017 have not forgotten.

Richards said she hopes the credit union's story reaches people in the broader industry who might be able to help, whether by solving a licensing challenge, extending a network's reach to the territory, or simply by recognizing that the credit union movement's most committed practitioners are not always in the most visible places.

"Too many times that we are so isolated," she said, "that the work that we do kind of goes unnoticed."

At St. Thomas Federal Credit Union, the work is very much noticed. Nine thousand members count on it every day. 

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