MIAMI-Mortgages, portfolio diversification, member convenience strategies, and auto loans (see related story) are what's working in lending, according to a survey of lending executives at the 2012 CUNA Lending Council Conference.

Rate Not Always No. 1 With Members

Especially with rates so low, members don't mind paying a little more for a loan if the CU makes the process easy for them.

Kathy Campbell, CEO of the $84-million Northeast Community CU in Elizabethton, Tenn., told Credit Union Journal her CU is almost 100% loaned out due to its focus on making lending affordable, easy and fast.

"People will pay more for milk at the corner store because it is convenient. People are in a hurry to finance their new homes, and getting a home loan can be stressful," said Campbell. "We make it as easy and quick to get a loan, do much of the process for members, and when it's all done they are happy and telling their neighbors."

Johnette Norman, VP of lending for the $180-million Cy-Fair FCU, Houston, believes the economic times demand working more closely with members on their loans, partly due to financial hardships. "You have to have a low rate because that drives the payment, but you also have to simplify the process and be quick, leverage online."

Jennifer Cowles, VP of real estate lending for the $1.4-billion American Eagle FCU, East Hartford, Conn., defined convenience as a great member deal and straightforward, uncomplicated loan pricing and products. "We call it back to basics," said Cowles. "It's not very complicated. We don't charge fees. We follow up. And we do what we say we will do. It's really a simple formula and our members like it."

Mortgage Lending Not Cooling

If the mortgage market is cooling off, as some reports have suggested, Keith Reynolds isn't seeing that.

"There is still a lot of volume," said the community president, CEFCU West, San Jose, Calif., and member of the CUNA Lending Council. "We are experiencing a lot of serial refinancers now, coming back for the third and fourth times."

In the hard-hit mortgage markets of Florida, Nick De La Cruz, director of lending at the $400-million First Florida CU, Jacksonville,  says mortgage lending is making a comeback, contributing significantly to 30% year-over-year overall loan growth.

"We are seeing a big resurgence in mortgages now. While the housing market here may not have bottomed out, we think it may be close," sad De La Cruz. "Members are gaining confidence, finding some equity in their homes, and are not afraid to refinance. We are also seeing some new purchase business."

Michael Donadio, SVP of lending for the $815-million Seven Seventeen CU, Warren, Ohio, said his CU is seeing a jump in mortgage lending due in part to the credit union developing relationships with realtors. "Twenty-five percent of our mortgage business is in purchases now."

Cast A Wide Net

The $2.3-billion Members 1st FCU, Mechanicsburg, Penn., has grown loans by 10% or better each of the last five years thanks to not putting too many eggs in one basket.

Fred Ryerse, SVP of lending, emphasizes portfolio diversity. "We are not beholding to any one type of credit-so business lending, indirect auto, real estate, credit cards...all of it has grown, and we emphasize all of it to our members."

That diversification not only helps the credit union react better to economic shocks, with one line of business picking up slack when another may taper off, it also paints a clear picture to members that the credit union is in the lending business and that it has all the products they need.

"Members tend to think of us first for loans and don't turn elsewhere," said Ryerse, who said many members have multiple lending relationships with Members 1st.

A key to its business lending relationships, said Ryerse, is getting closer to the business to lend to the needs of its employees, and to possibly add the employer as a SEG.

In Colorado Springs, Colo., the $3.7-billion Ent FCU is casting a wide lending net these days. Ent FCU SVP Bill Vogeney said that the CU is now is working on smaller loan opportunities than in the past.

"It used to be we would cut off and not follow a loan opportunity that would bring us less than an extra million-and-a-half dollars month. We can't do that anymore," noted the CUNA Lending Council vice chair. "Those ideas put on the backburner we are now going after. If we can figure a way where one little piece of business can pick up a half-million more dollars a month, we are doing it."

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