Moving Forward at Appalachian Community Federal Credit Union:

Helping Our Communities in New Ways

Gray, TN – July 16, 2019 – Last August the Johnson City Press reported that Appalachian Community
Federal Credit Union (ACFCU) had received a $1 million Capital Magnet Fund (CMF) grant from the U.S.
Treasury Department’s CDFI Fund. The grant was to be used in portions of metropolitan Johnson City to
rehabilitate substandard, often investor-owned rental houses. During the second half of 2018, former
ACFCU CEO Ron Scott led attempts to form multiple partnerships to make the “Neighborhood
Revitalization Program” a success and add to the already long list of grant-driven activities being
pursued by the $235 million credit union.

Then came January 2019 and the resignation and subsequent death of Scott, followed by resignations of
other key executives and the layoff of 11 employees, many tied to ACFCU’s Community Development
area. A shift in strategy was necessary, and the credit union has since evolved under new leadership.
This evolution included a return of the $1 million CMF grant funds in April. No grant money had been
spent on the initiative and the CDFI Fund terminated ACFCU’s grant obligation with no conditions.

While the needs of the metro Johnson City area have not changed, the need for ACFCU to streamline its
operations has, ACFCU’s new President/CEO, Kelly Smith said.

“As a member-owned cooperative we have a fiduciary responsibility to carefully evaluate how we spend
and lend every penny, and to balance between serving our communities and serving our own members
who participate in this cooperative,” Smith said.

“Credit unions are not charitable entities. We do not seek extra profit, but we still need a margin of
profit for operating expenses. While we ultimately did not feel it was in ACFCU’s best interest to utilize
the CMF grant, we continue to serve our communities.”

For instance, since 2017 ACFCU has helped more than 225 people achieve homeownership through a
grant-funded down payment assistance program, providing more than $2.4 million in interest-free
loans. This has generated roughly $20 million in home sales, changing families’ lives and boosting the
region’s economy.

“We believe in the DPA program because it’s a great way to give members in our community a hand
up,” Smith said. “Each loan of $10,500 per member helps make their dream of homeownership a reality.
What’s even better is that the member also has skin in the game. They learn about budgeting and saving
to pay their mortgage, insurance, taxes, or even to buy furniture. Sometimes people just need a little
extra lift.”
With branches located throughout Northeast Tennessee, Southwest Virginia and Eastern Kentucky,
Appalachian Community Federal Credit Union has been in business since 1932. For more information,
please visit: www.myacfcu.org or call: (423) 378-3778.