CHARLESTON, W.Va.-In the small markets of the Mountain State, Pioneer West Virginia FCU is putting up some big net income numbers less than two years after showing combined losses of $300,000 in 2009 and 2010.
The turnaround, posting more than $1 million in net income last year and on pace for the same figure in 2012, is the result of a credit union that essentially started over, with the board making the tough choice to bring in a new management team. The results speak for themselves, and NAFCU has recognized the $143-million's CU's efforts with its Federal Credit Union of the Year honor for CUs below $150 million in assets.
Dana Rawlings took over as CEO in July 2010, and then hired SVP/CFO Dan McGowan two months later. Under new leadership dramatic operational changes were made:
* A new metrics system was created to let the CU know each day where it stands in key performance categories.
* Pioneer West Virginia was rebranded.
* Delinquencies were shored up and loans began growing, backed by creative new lending products, like a 10-year first mortgage.
* The internal culture was flipped 180 degrees, from one that did not value employees to one that sees employees as the credit union's most valuable asset.
"We began rewarding employees for their performance, recognizing their accomplishments, and encouraging their feedback straight to the top of the CU," said Rawlings. "We also improved salaries and significantly improved the employee benefits package."
Well Above Peer
Those moves have led to some high performance rankings nationally. Callahan & Associates, for the 12-month period ending June 30, 2011, notes that Pioneer's total loan growth of 39% ranks sixth in the nation and first in West Virginia. The CU's credit card balance growth of 32% ranks 15th nationally and first in West Virginia.
But what Rawlings sees as important as any element of the turnaround, is improving communications with staff. "One thing I told the board from the start is that you can excuse me for over-communicating. Once a month, right after our board meeting, we have a meeting with all of our employees. They hear everything that we told the board-our month-end numbers, what comments were made, what projects we are working on . . ."
PWV would not be in the position it is today, with almost 11% capital, had it not turned lending around. The credit union experienced a 13-month decline of $4.6 million in gross loans outstanding through October 2010, followed by 14 consecutive months of loan growth resulting in a $30 million (up 48.7%) increase in gross loans outstanding as of December 2011, with a corresponding improvement in the loan-to-share ratio, moving from 53.9% to 80% today.
The Daily Dashboard
What helped improved lending was creating a set of dashboard metrics-the Daily Status Report-the management team could review every morning and see where Pioneer West Virginia stands at that time and what activity had taken place the previous day.
"When I walk in every morning on the corner of my desk is a legal sheet of paper and I can tell you how many loans we did yesterday, how many negative share accounts we had, what my deposits were, delinquencies, quality of the loan paper, capital ratio, and I can break out all the loans by product," Rawlings explained. "I can break out my delinquencies by product and tell you what my loan rates are. I have a snapshot that shows me exactly what we did yesterday."
Rawlings insisted that a credit union that does not know what has taken place at the credit union each day has no idea where the organization is heading. When McGowan, came on board in Sept. 2010, PWVFCU quickly instituted the metrics dashboard. McGowan explained that much of the trouble the CU experienced before the dashboard was instituted resulted from decisions made on stale data, often weeks old, and served up piecemeal. The credit union now uses IBM Cognos TM1 OLAP software to pull information from its core processing system, mortgage processing system, and credit card processor.
"It has made a big difference," said McGowan. "For instance, we just crossed the $102-million mark in outstanding loans for the first time in this institution's history."