RIVERSIDE, Calif.-With its local economy still struggling to recover from the recession, $706-million Altura Credit Union has introduced a checking account designed to help those with negative reports on ChexSystems reestablish a relationship with a financial institution.

In the Inland Empire region of Southern California, east of Los Angeles, unemployment remains at 12.8%, and local foreclosure rates are among the highest in the nation and continue to be the fifth-highest in the state.

Jennifer Binkley, chief operating officer, told Credit Union Journal the new "Reliance Checking Account" allows Altura members to recover and rebuild their financial status, and eventually become eligible for full-service Altura checking accounts. Reliance Checking includes access to an educational program that is "not required but highly encouraged," she said.

The account has a $10 monthly service fee.

"Every six months in our managers' meeting we brainstorm about what is going on," Binkley explained. "We know the economy in the Inland Empire has had it particularly tough. We want to help the local community in a way that helps people in need. We noticed we were denying a number of people for membership based on ChexSystems."

Now when someone applies to open a new account and has an unpaid closure on his or her history, Altura will offer Reliance Checking, Binkley continued. The one exception: if there is an instance of fraud ACU will not open an account.

The Reliance account does not allow a deposit at an ATM, because that is where most checking fraud occurs due to processing delays, she said. Reliance does not allow drafts, but does offer one free bank check per month for paying of rent, mortgage or any other expense.


Moving To Next Level

After six months of positive account activity, Reliance Checking account holders are eligible to move up to the next level in financial recovery, Altura's Renew Checking Account. Renew has no minimum balance requirements, allows members to write personal checks, and adds ATM deposit access. After six months of positive Renew account activity, members become eligible for any Altura checking account.

"If they owe another financial institution, say, $200 for an unpaid closure, they cannot move up to Renew until they pay that off," Binkley said. "Renew Checking gives people more flexibility, resources and tools."

Both Reliance and Renew accounts include the "highly encouraged" education component, and neither come with overdraft protection. Binkley said if a debit transaction is attempted for more than is in the account it is denied. If there is an overdraft the check would bounce and the member would be charged an NSF fee. If more than three of those occur Altura shuts down the account.

"We didn't want to go to the community with a product for people with poor credit," she noted. "We have taken a checking account and put restrictions on it, but it still allows people to have a relationship with a financial institution rather than rely on check cashers."


Calculating Profitability

Altura is advertising Reliance Checking in local newspapers, and it is being marketed through in-branch materials and on Altura's website and Facebook page. Binkley said promotional efforts began in mid-August.

"Response has been slow, which is fine because we did not want a big influx-it is limited to 7% of total draft balances. As of last week we had 48 accounts, or less than 1%."

On the back end, Reliance Checking includes "real robust" ongoing monitoring on a daily basis, said Binkley. If an account has a negative balance that would be addressed immediately. There have been no losses to date.

In six months Altura will know the profitability of the account. Binkley said management is projecting similarities to the CU's youth account-low average balances but high debit card use in small dollar amounts.

"We expect there will be interchange income on a volume basis. The $10 fee for Reliance is lower than what Renew was before-it had been $20-due to the interchange component."

In its most recent Call Report, Altura had $11 million in net income for the six-month period ending June 30. Its net worth ratio was 8.69% ("well capitalized"). In 2011 it posted $8.4 million in net income after posting losses in 2010 ($5.8 million) and 2009 ($20 million).

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