The pastor who founded the city's only credit union made of mostly members from black churches is recommending that the credit union merge with the Tennessee Valley Federal Credit Union.
Initially the Rev. Paul McDaniel's goal was to have a black-owned bank.
The Church Koinonia Federal Credit Union is in good standing with 1,700 members mostly from 52 churches and $2.5 million in assets. The credit union specializes in helping low- to moderate-income residents get loans.
The problem is the credit union is not able to provide the staff needed to maintain regulatory requirements and paperwork demanded by the National Credit Union Administration, the organization that insures members' savings up to $250,000, said Koinonia credit union manager Ann Jones Pierre.
Because of the economic downturn, failed loans and investments, the National Credit Union Administration has put more stringent requirements on loans that require more planning and paperwork, Pierre said.
"Large credit unions are having a problem also, but they are able to hire four or five people to take care of the regulations," Pierre said. "Smaller credit unions don't have that luxury."
The Church Koinonia Federal Credit Union has a staff of three people. Eight staff are needed to keep up with the regulatory requirements, serve members and provide expanded services, she said.
The credit union is having a special meeting at 5:30 p.m. Tuesday to vote on the proposed merger with the Tennessee Valley Federal Credit Union.
McDaniel recommended the merger in a letter to Koinonia credit union members.
"We can no longer continue as a credit union in the current economic environment," McDaniel wrote. "We are unable to expand our products and services, branch locations and automated services to meet the needs of our members and agree that the merger would be in the best interest of our members."
He said he started the credit union after a vision in 1998 to provide financial services to members of local churches of the Koinonia Association and their families. The Koinonia Association is an organization made of local ministers.
"We saw so many of our members and friends who needed help with saving and money management, in addition to paying exorbitant fees to borrow money," McDaniel wrote. "After a number of meetings 15 churches and two individuals contributed the necessary capital to begin chartering a credit union."
In January 2000 the Church Koinonia Federal Credit Union opened for business.
Contact staff writer Yolanda Putman at yputman@times or 423-757-6431.
Yolanda Putman has been a reporter at the Times Free Press for 11 years. She covers housing and previously covered education and crime. Yolanda is a Chattanooga native who has a master’s degree in communication from the University of Tennessee and a bachelor’s degree in journalism from Alabama State University. She previously worked at the Lima (Ohio) News. She enjoys running, reading and writing and is the mother of one son, Tyreese. She has also ...