SAN DIEGO-The numbers speak for themselves: Just 24 credit unions of more $50 million in assets grew their consumer loan programs by 5% or more from 2008-2010.
But some CUs within that group did see strong growth, and three of them shared their strategies on not just surviving, but thriving during America's CU Conference here. The session was facilitated by Patrick McElhenie, sales planner at CUNA Mutual Group.
The advice from Garth Strand, CEO of the $179-million Hutchinson CU? "Eat your vegetables!" advised Strand. "It's not flashy, but you have to continuously focus on the basics of being competitive, speedy, accurate, polite, confidential and following through to even be in the game."
At Hutchinson CU, financial services representatives are able to approve loans, but any loan denials must come from the central underwriting department. "We don't say no until we have done everything we can do to say yes," said Strand.
Approximately 7% of consumer loan volume at HCU is the result of indirect channels, in part because the credit union said it is difficult to find a philosophical match with a dealer that is good for members.
No Silver Bullets
By contrast, in Collinsville, Ill., the $794-million Scott Credit Union has seen huge growth in indirect lending since 2007. "There are no silver bullets with indirect lending," said COO Steve Stryker. "We have engineered our program for the long haul by focusing on dealer communication and response times."
Scott Credit Union's dealer network has grown to more than 200 from 70 over the past five years, and in the process it has implemented numerous changes including:
• Adding an electronic conduit to improve dealer communication.
• Implementing an instant decision matrix and a centralized underwriting department to speed response time.
• Streamlining Internet loan application.
• Adding a dealer representative to manage the dealer relationship.
The credit union has also expanded its incentive program for frontline staff, which is driven by the non-interest income generated on direct consumer loans. As a result, earnings on non-interest income grew to $500,000 in 2011 rom $30,000 in 2007.
'We Are One'
Another successful lender can be found in Fort Worth, Texas: EECU. The key for EECU, said SVP Joe Rossa, has been moving its indirect lending program to an in-house program from a third party.
"The key to indirect lending is hiring the right people and developing a relationship with dealers you can trust," Rossa said.
The $1.3-billion EECU's auto loan portfolio has grown to $640 million in 2011 from $275 million in 2007.
Rossa said one key for EECU in auto lending has been the implementation of a "We Are One" philosophy. That program seeks to avoid competing against dealers with which it already has a relationship by issuing preapproval certificates to members with the same rates and terms whether they close the loan at the dealer or the credit union.
The branch still gets credit toward their goals and incentives for the application and preapproval so staff members are not selling against the dealer.