LEXINGTON, Kent.-The lending formula at University of Kentucky FCU isn't one common to most credit unions, but then, neither is its success-nearly 20% loan growth during the last four years.
UKFCU averaged 17% loan growth in 2008, 23% in 2009, 27% in 2010, and 11.5% in 2011. It's achieved the astronomical numbers through some unconventional approaches that include connecting with potential loan applicants through online chat and social media, and growing home equity lending by 20% through a unique arrangement with Realtors.
As a result, CUNA Mutual Group recognized the $420-million CU with an Excellence in Lending Award in the consumer lending category, assets more than $250 million, at the CUNA Lending Council's 2011 Annual Conference.
"We try to reach consumers on the level they want to be reached," said Greg Baker, VP of sales and marketing. "We blog and have a Facebook presence to reach out and let people know who we are and what we offer. Lots of people get on Facebook three or four times a day, where they might only hit our website's home page once a month."
The credit union developed an e-Branch Unit that is steadily transitioning loan apps away from the call center. The e-Branch is run by three employees who are responsible for managing social media outlets and handling loans coming in via e-channels, such as the website, e-mail, and even live chat.
Getting The Process Started
E-mail and chat channels cannot complete the entire loan application, but get the process started. After gathering basic information the e-Branch team provides detailed instructions on how to finalize the loan securely online, or by coming to a branch, if the person prefers. The team is having a big impact, said Baker, because they respond to loan inquiries the same way the member contacted the credit union. "People are busy," said Baker. "They choose a method to communicate with us and it's their most convenient avenue. To get back to them in any other manner risks them not paying attention."
Overall, the e-Branch-through e-mail, fax, and chat is opening about 100 new accounts each month and 90 new loans.
What also may seem unconventional, said CEO David Kennedy, is home equity loans growing by 20% last year, due in large part to a unique arrangement with local realtors and mortgage brokers.
"We have set up some indirect shops where we come in and do the second mortgage when the purchase is for the first, and we get the second out of that. We partner with local companies we have vetted well and are comfortable with, and we will go to a 95% equity position in total-they will do the 80% and we take the 15%."
Other Lending Growth Areas
Other significant growth areas were indirect auto that jumped in 2010 ($51 million in originations) over 2009 ($29 million in originations) and credit cards grew by 6% in 2011. "We try not to focus growth too much in one area to manage risk," noted Kennedy."
UKFCU also lets the community know it has flexible rates and terms and will work with borrowers. To be able to offer more choices and handle a greater demand, the credit union instituted automated loan decisioning, which now approves almost half of the CU's loan apps. "Automated decisioning lets the easy loans pass right through," said Kennedy. "That frees up underwriters to make decisions on the gray apps, and to try to reach a little deeper to make deal work."
The credit union spends $350,000 annually on direct marketing. Outside of Facebook, YouTube, blogs and other online channels, UKFCU uses billboards, radio, and TV heavily.
Kennedy said University of Kentucky FCU has made a strong effort in the last five years to get its brand message out: a trusted partner that provides excellent services at a better value than banks---and offers loans. The CEO said educating the community is where the success begins.
"We can't overlook the fact that a lot of consumers and members don't often think of the credit union first when they need a loan."