CHARLESTON, W.Va.-Pioneer West Virginia FCU has completed an impressive turnaround.
The CU halted a 13-month lending skid during which its outstanding loan balances dropped each month and ROA plummeted. Now Pioneer is in its 11th consecutive month of loan growth and is raising a number of other performance metrics, thanks in large part to a daily dashboard of CU metrics and changes in leadership.
The $140-million CU has improved loan-to-share ratio from below 55% to 75% today, as well as the quality of its paper. ROA went from negative in 2009 and 2010 to 49 basis basis points through Sept. 2011, and the credit union is on track for 80 BPs by year's end, meaning more than $1 million to the bottom line.
New CEO Dana Rawlings, who took over in July of 2010, quickly realized that what PWVFCU desperately needed was a set of dashboard metrics the management team could review every morning and show where the CU stood 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."
Stepping into his role at the struggling Pioneer, Rawlings understood the importance of a daily dashboard, having instituted a system at his previous credit union, Smart Financial CU in Houston, where he was COO. At Smart Financial, Rawlings pointed out to his CEO the need for the metrics by walking into the boss' office one morning with a bag over his head. "I knocked on his door, came in, and bumped into some furniture. My CEO asked me what the heck I was doing. I told him, 'This is what I see every morning when I come into the office.'"
Not knowing what has taken place at the credit union each day, and therefore no firm idea as to where the organization is heading, caused a great deal of problems at Pioneer before Rawlings took over. With the help of SVP/CFO Dan McGowan, who came on board in September 2010, PWVFCU quickly instituted the dashboard of performance metrics and business results called the "Daily Status Report."
Rawlings explained that a lot of the problems the credit union experienced before the Status Report was instituted were due to 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.
Stale data had led to trouble and contributed to Pioneer's earlier performance slide. Going back to Jan. 2009, the CU's delinquency ratio was 2.83%. Pioneer now has the figure at 14 basis points. The credit union experienced $445,000 in net charge-offs in 2009, rising to $683,000 in 2010. This year Pioneer estimates charge-offs will drop to $175,000 annually.
"A credit union has to understand what it has to work with," stated Rawlings. "If we know what we have to work with we can work around problems, avoid surprises, and leverage our strengths. You simply have to know where you stand so you can see where you are going."