NCUA Webinar: Best Practices to Grow Your Credit Union (6/8/2016)

Kathryn Baxter: Good afternoon, everyone. Welcome to our June webinar. This is one of three that we have for the month of June. Today
we’re going to be entertained under the topic “Best Practices to Grow Your Credit Union. ” My name is Kathryn Baxter. I’m going to be your moderator for today. I’m joined by Vanessa Lowe, and Vanessa’s going to host a panel of guest speakers today. We think you’ll enjoy this particular
webinar. We have a few announcements that we’re going to give you prior to going forward. We’d like to ask you, too, because we’re dealing with a new system today, when you ask us some questions, please include the name of your speaker so that we can make sure that they get them. So I’d like to point your attention,
please, to our administrative announcements. You know how this goes. Please adjust the volume on your computer so that you can hear this webinar. If you want to enlarge the slides, just drag the bottom right corner so that you can do that. From this website, you will need to allow pop-ups. During this webcast, you may use the Ask a Question
feature that’s in the left-hand corner of your console and ask a question. And keep in mind, we said we’d like for you to ask questions throughout the webinar. Please use the name of the speaker that you’d like to address your question, if you know that name. And of course, while you’re on the line, we’re going to push out a survey to you,
because we really want to know what you think of what we do here with our webinars and give us some suggestions of topics that you’d like to hear later. And as always, in approximately three weeks this webinar is going to be closed captioned for on-demand viewing. I’m getting ready to turn our console over to Vanessa Lowe. Vanessa’s going to
tell you about what you’re going to hear today, but also let you know that today you may receive a certificate of training for this particular webcast. So without further ado, Vanessa, we’re listening. Vanessa Lowe: Thank you so much, Kathryn. Welcome, everybody, and thank you for joining this topic. All credit unions, or most credit
unions, are interested in growing, so we thought this would be a good one to profile just as we start entering summer. So let me start with our usual disclaimer. This webinar, like all of them, is being offered for informational and educational purposes only. NCUA does not endorse any particular credit union or vendor or their employees,
products, or services. So here’s what we’re going to hear today. We’ve been doing these webinars now for about three years, and we often have guest speakers. Many times they’re vendors, they’re credit unions, they may be NCUA staff. Well, today it’s all about small credit unions, and so we have three small
credit unions that we’re profiling. And I found them because they have grown nicely over the last five years. They are also all low-income designated, so that’s something that’s similar about them. But otherwise they just have different strategies. These strategies may not be things that might work for your credit union,
but we’re going to give you three different profiles here. So we’re going to hear from Greensboro Municipal Federal Credit Union. They grew from $42 million to $47 million from 2011 to 2015. Then we’ll hear from Greater Niagara, $34 million to $41 million over the last five years. And then Financial Security Credit Union, $28 million
to $42 million. So you’ll hear more about them as the speakers come on. Let’s remember that with our webinars, you can ask questions throughout the webinar, so you can start asking them now. As Kathryn said, try to specify who you’re talking to. And here’s what will help. Let’s put some faces to the voices you’re
going to hear. That is my face. I’m Vanessa Lowe. I’ve been with NCUA for a little over nine years now as an economic development specialist with the Office of Small Credit Union Initiatives. Before I came here, I was with the US Treasury Department with the Community Development Financial Institutions Fund. And let’s
move on and hear from our guest speakers. Jerry? Jerry Wise: Thank you, Vanessa. Hi, my name’s Jerry Wise. I’m president and CEO of Greensboro Municipal Federal Credit Union. I’ve been in the credit union movement for about 20 years now, with the last seven of them being with Greensboro Municipal. We can attribute our growth
over the last few years in part due to the collaborative partnerships that we have established. These partnerships have allowed us to remain relevant to our membership by giving us the ability to offer new products and services. Vanessa Lowe: Thank you, Jerry. And next let’s hear from Carolyn. Carolyn DuBois:
Good afternoon. I’m Carolyn DuBois, president/CEO of Greater Niagara Federal Credit Union. I’ve been in the financial industry since 1982, with over 25 years at the credit union. I was the operations manager for 15 years and became the CEO in 2007. I’m pleased to be here to share with you
some of the strategies that have led to our growth. Much of our growth is due to mergers with other credit unions, expanded products and services, new locations, and taking on more risk to serve the needs of our members. Vanessa Lowe: Thank you, Carolyn. And let’s hear from Judy. Judy
Carrasco: Hello to everyone. I’m Judy Carrasco. Thank you for having me today. I’ve been the CEO at Financial Security Credit Union for 15 years. We are located in Carlsbad, New Mexico, the home of the beautiful Carlsbad Caverns National Park. Today we want to talk about how
the credit union advocates for strategic planning and why we attribute much of our success to this principle. Vanessa Lowe: Thank you, Judy. Okay, so Kathryn briefly mentioned that, as with most of our webinars here lately, you can get a certificate of completion. Here’s what you need to do. You need to participate in pretty
much the full webinar; stay on for at least 45 minutes. You need to answer all of the poll questions, and there are four of them; we’re going to get to our first one in just a moment. And then finally, there’s a quiz, a 15-question quiz. In the bottom of your screen, you’ll see several little – we call them widgets, and there are two
magenta ones. One of them will tell you how far you are in achieving the certificate, following the instructions to achieve the certificate. The other one has the quiz. So I would encourage you to do two things. Go ahead and start looking at the quiz so you can get familiar with what questions you’re going to be answering. But
also, download the slides, and the slides are in the green Resource widget. Both of these will help you to achieve – to get the certificate and meet all those requirements, okay? First quiz, or first poll. The question is, what is your credit union’s asset size? And we go from less than $10 million, all the way up
to greater than $250 million. And this is in total assets. For all of you who are not with credit unions, there is another option that’s called “not applicable. ” Either you’re not with a credit union or for any other reason, just click “not applicable” if the question is not applicable to you, okay?
All right, let’s see what kind of responses we’re getting there. We’re going to give it just a second. Kathryn, help me push those results forward, will you? Let’s see the diversity of our participants. Okay, so on this call – it’s always interesting. The topic really drives where our concentration falls in terms of
credit union asset size. So for this one, we got mostly greater than $10 million but less than $50 million. So, great, those are the credit unions that want to maybe get started on their growth strategy. All right, Jerry, we are ready to turn it over to you. Let’s hear your story. Jerry Wise: Thanks
again, Vanessa. To get us started, here’s a snapshot of our website that is full of information. We use our website along with email blasts as two of our main marketing channels that drives our growth. So keeping our website up to date is very important. We’re also currently in the process
of redoing our website to give it a more up-to-date look and feel, and it will also be a responsive website that will format to any device that you use. Greensboro Municipal Federal Credit Union was originally chartered in 1937 as a state-chartered credit union, and we converted to a federal charter in 2011. Today
we have about 80 SEGs, but our original SEG, the city of Greensboro employees, plays a huge role in our success. They make up the majority of our membership, and they have stable jobs and steady income, which helps keep our delinquency under control and keeps our loan demand pretty steady. I also have a great relationship
with the city management team, which has provided us opportunities for growth. A little bit more on that later. We are also a low-income-designated credit union, and have been since 2014. We have grown our assets by $5 million since 2011, and ended 2015 with $47 million in assets. But during that
same time period, we grew our loan portfolio by $8.5 million, which has definitely helped improve our performance ratios. I’ll go into more detail about how we did this in a few slides. Also, like most everyone else when the recession hit, we had to pay the temporary
corporate stabilization assessments, and so our net worth took a huge hit. Our ratio dropped from above 13% pre-recession time to as low as 10.48%. But at the end of 2015 we were back up to 10.92%. When our net worth was declining, our board adopted a
net worth policy to help them monitor our capital. Our policy states that our minimum net worth ratio will not fall below 10%. This has been very beneficial in keeping our board of directors in tune with our financials. We currently have a
very small staff of 15 for two branches, so everyone has to do their part for us to be successful. I put on the slide that we have great loan officers, but really, our whole team does a great job in building relationships with our members. Our loan officers, for example, don’t
just process our member’s request; they talk to them about what – to find out what the loan is for, so they can put them in the best loan for their particular financial situation. I’ve seen so many times where a member comes in for one type of loan but ends up walking out with a different type of loan, a
loan that better fits their financial needs. When the loan officer does this, it also helps build trust and loyalty with our member. We also have a diverse board that’s made up of individuals ranging from 38 to 68 years of age, five of them women, four men. Two of them are retired, and the others
are still working. But I’m sure they’re probably wishing they were retired, just like I do some days. The best attributes about this group is their open-mindedness and their focus on their membership. They are always willing to listen and share different ideas,
which helps them think outside the box. We also manage from our mission statement. And what I mean by this is we always tie our decisions back to our mission statement. If what we are proposing or thinking of doing doesn’t ultimately help us get closer to
achieving our mission, we don’t do it. But if it does, it’s a no-brainer decision and we move forward with it. That’s if we can afford it, of course. We revamped our mission statement a few times, and we think our mission statement now says who we are, what our purpose is, and how we’re going to get there.
It’s just not a statement that sounds good or a catch phrase; it’s a statement that means something to us, and we hope it means something to our members. The age diversity of our membership is probably not that much different than many of yours. 21% of our members are between the ages of
45 and 53 years old. But overall, 58% of our entire membership is 45 years or older. So when we focus in on growing our loan portfolio, we try to make sure what we’re offering is appealing to all age groups, especially the younger borrowing member. We are also
working towards offering convenient products and services, like mobile apps, remote deposit capture, account-to-account transfers, and person-to-person transfers, to help gain more younger members. We realize we need to provide these things to remain
relevant with the younger generations. The diversity of our loan portfolio has not always been this good. But with our recent loan growth, we’ve been able to improve our diversity. To accomplish this, we rolled out a revamped HELOC program and a new mortgage program. With
the success of these programs, we’ve been able to reduce our concentration in used vehicles, yet this still remains our largest category in our loan portfolio. To make our HELOC more appealing, we made it more convenient for our members to access their funds and to lower the
rate to be more competitive. As a result of these changes, our HELOC portfolio has grown $1.5 million since late 2012. We have generated a substantial amount of interest income and other operating income since adding mortgages to our loan portfolio.
Last year we focused on building our mortgage portfolio to about $2.5 million to $3 million, to generate long-term interest income. We met that goal by the beginning of the fourth quarter last year, so then we started selling most of our mortgages to Fannie Mae. We did this so we
could keep offering mortgages to our members and also to offset interest rate risk. The income generated from the sale of mortgages gets classified as other income, and last year that made up about 5% of our other operating income. So far this year, it makes up 12.5% of our other
operating income. Plus we still have the interest income stream from our mortgage portfolio. This helped us reach a ROA last year of 0.75%, and so far this year we have an ROA of 1.24%. So far this year, our game plan is working.
One of the keys to success for us has been the ability to build some great partnerships with our SEGs and vendors. Without these relationships, we wouldn’t have been able to provide mortgages or offer our Save to Win product, which I’ll talk about in a
moment. I should’ve added the Carolina Credit Union League to this slide, as they were very instrumental in bringing the Save to Win program to the Carolinas. Earlier, I also mentioned our relationship with the city of Greensboro management. That relationship opened the door for us to work with the
economic development department, which has led us to serving other areas of the city. And we will be opening a third branch in 2017 in that area. When I started here in 2009, I knew we needed to offer mortgages to remain relevant in our market. Ever since
then, I had been talking with our board about the need for a mortgage program and how it would look. Our goal was to have a program that we had control of in terms of setting rates, being able to portfolio or sell a mortgage to the secondary
market, and if we did sell, we wanted to retain that servicing. And we also wanted to control the types of mortgages that we offer. We also knew we couldn’t do this on our own. We needed to find some partners that could help us. Our core processor at the time couldn’t
handle mortgages. So in 2012 we converted to a new core processor. We chose CU Answers, who has a platform that can process mortgages. Next step was then to pick a mortgage processor. We found that in Neighborhood Mortgage Solutions. They have a relationship with Fannie Mae that
we can utilize to sell our mortgages, and they are also able to service all of our mortgages. They also integrate well with our core processor, which was a huge bonus and a huge reason for us partnering with them. We finally launched our program in late 2014, and we did this very
slowly. I think we might’ve processed two or three loans that – remaining of that year. And then in 2015 we focused on building our portfolio. Now that we have met our portfolio goal, we are now mainly selling to help manage our interest rate risk.
I mentioned our Save to Win program a few slides ago. If you’re not familiar with this, it is a prize-linked savings program where members are entered into a cash prize drawing for every $25 deposited into their Save to Win account. They’re allowed up
to ten entries per month, but there is no limit on how much they can deposit. Prizes range from $25 to $5,000 on a monthly and quarterly basis. In 2014, you can see the impact the credit unions in North Carolina had. We’d opened almost 2,000 accounts.
Aggregate savings was over $1.6 million. And most importantly, 74% of those that opened accounts were financially vulnerable. And you can see that the average balance was almost $2,000. So some of these people had zero savings
before, and now they have about $2,000 in savings. That’s huge. I truly believe and love this program and how it has helped our members save. As part of the program, our participating members have to fill out a survey at account opening to help
Doorways to Dreams, a nonprofit research company, gather information about – they gather information about consumers and what triggers them to save. This led to our participation in a yearlong research study done by Doorways to Dreams that took a closer look at our members and how this
program has impacted their lives. When they completed their study, they published an article about the findings, and it was very insightful to hear about what this program has meant to our members. And to expand on our goal of helping members save, we also offer
financial education seminars for our members. We cover topics like how to buy a car; how to balance a checking account, which is focused towards our younger members. We also offer elder financial abuse seminars and estate planning, which covers the importance of wills and trusts.
This is a picture of our last estate planning seminar, and you can see these seminars are small. We usually have 10 or 12 in attendance, but sometimes even fewer. Having small groups tends to lead to more intimate and open dialogues, and our members tend to get more out of it in the smaller group
setting. For this seminar we partnered with a legal firm, who is also a SEG, to present this information. But other times our staff will conduct them. It all just depends on the topic. By providing these seminars, it not only educates our members, but it also brings brand awareness to our
members and it builds member loyalty. They feel that we are here to truly help them, not just to make a profit from them. It also gives us more opportunities to build relationships with our SEGs and other vendors to help put on these sessions. So having a presence in the community
is very important. It’s another opportunity to show our members and potential members that we truly do want to help our community grow. Here are examples of some community engagement activities that we have done over the years and still participate in today.
By being engaged in our community and with our SEGs, it has opened up opportunities for us. The Renaissance Community Co-op is a community-owned and -run grocery store that is opening in an area of the city where the community doesn’t have convenient access to a grocery
store. It is located in an area that is hard to attract large chain grocery stores. So they worked with the city to find a location to put their store. And in their discussions, they also discussed other businesses that they would like to see around them. One of those was a credit union,
and since we had a relationship with the city, that led to discussions with us about opening a branch next to the co-op grocery store. We weren’t looking to do this at this time. But by entering into those discussions and learning about the community, it has led us to
expanding our services to other areas of the city. This area also happens to be classified as underserved, so we are also in the process of expanding our field of membership to include the underserved areas of Guilford County, so that we can serve these communities and contribute to the
economic revitalization of this area. This has also led to other discussions with the city about how we can partner together to offer products and services to other areas of the Greensboro community. To close, I’d just like to say that whatever your business plan is, remain flexible so you can capitalize on
opportunities that pop up, and use the cooperative spirit to build relationships. It will benefit you at some point in time, and it definitely has for us. Thank you. Vanessa Lowe: Thanks so much, Jerry. Great information. I want to remind folks that you can submit questions at any time. So Jerry
shared some very interesting strategies. Some of you may be interested to learn more about Save to Win. If you simply go to www. savetowin. org, you can find other credit unions that are participating in that. It’s actually sort of a national movement. Some legislation needed to be changed in order to allow credit
unions to participate in this, but there’s at least nine states now that have Save to Win-like programs, so definitely an interesting opportunity you may want to consider. So also think about – Jerry talked about how his board set a minimum standard for their net worth ratio. Has your board done that? How do you do that?
How do you monitor that to make sure that you’re meeting that standard? None of us want to get close to prompt corrective action. So let’s move on, and now let’s do our next poll. The question here is, did you meet your 2015 growth goals? And we’ve got a couple that we think are particularly important if
you’re truly interested in growing. So the options are here – you can check all that apply – we met or exceeded our member goal, meaning whatever number you set, to say we’re going to have X number more members; we met or exceeded our loan dollar goal; we met or exceeded our net worth ratio goal; we didn’t meet
any of the above goals; we didn’t set any of the above goals. So go ahead and give us your responses there. Again, you can click as many as you need to. And thanks, it’s helpful for us to see the feedback, because it helps us, Office of Small Credit Union Initiatives, to think more about what other training
or advice or guidance we can offer small credit unions to help them achieve the goals that they want to reach. Kathryn, can you help us see those results? Thank you. Okay, so looks like everybody is – most folks – let’s see, 40% have met their net worth percent goal, so congratulations on that.
The next one that has a high line is we met or exceeded our loan dollar goal. I know that’s often a goal that credit unions set, so that was 36%. Let’s see, smaller numbers for – okay, so 12% didn’t set any goals. Hopefully this webinar if nothing else will encourage you to
think about some goals to set. And then 21% met their member goals. So thanks for that feedback. Okay, let me remind you about participating in the polls, Kathryn whispers to me. Make sure you do the polls, because you need to do that in order to get your certificate. So please, please, make sure you answer
those. Okay, we’re ready to move on and hear from Carolyn. Carolyn DuBois: Thank you, Vanessa. We’ve had consistent growth at Greater Niagara over the last several years. I’m especially excited about our loan growth. We’ve added new products, taken on more risk, and entered into a program to expand our
credit card portfolio. We introduced a new website at the beginning of the year, along with improved home banking and bill pay products. We’ve also added mobile banking. Greater Niagara Federal Credit Union was chartered originally in 1954 in Niagara Falls, New
York, as Carbon Products Federal Credit Union. After the original sponsor shut down, the credit union expanded by adding SEGs, and completed mergers with a few smaller credit unions. The credit union relocated to the town of Niagara in 1997, where we purchased
a building and changed our name to Greater Niagara. We received our community charter in 2003, which covers all of Niagara County. At the end of 2003, we had a merger with a credit union of similar size and makeup, which increased our assets to $18 million. We were able
to build our present building, which has a drive-through and an ATM, so that we were better able to serve our members and able to attract new members. Our last merger was April 2011, which brought our assets to $34 million. With our net worth over 14%
at the time, we were in a good position to take on this merger. Our net worth was 11.94% at the end of 2015, with a goal set by our board of directors of a minimum of 11%. We also received our low-income
designation in 2012. The top picture is our main office in our town of Niagara. The bottom one is our North Tonawanda office, which is the branch we kept after our merger. City employees, including the police department, fire department, and public
works, were the core groups of this branch. Since the merger, we’ve been able to increase membership in the area because of our community charter. We recently added a new drive-through ATM at this branch. Since 2011, our assets have increased to $44
million. This is the structure of our credit union. I’ve been the CEO since 2007. We have 14 employees between our two offices. We have a seven-member board that is diverse and open to ideas for growth. A couple of board members are from the original SEGs, and
the rest are from different areas of our community. We’ve had some new volunteers in the past ten years who have brought different ideas to the board. Our board is very open to looking at new products to attract younger members, as well as products that fit our current membership.
They’re also looking into products that will help people in lower-income and underserved areas. Real estate loans have been an important product in the makeup of our loan portfolio. First mortgages and HELOCs make up 46% of our loans.
Our policy allows us to have up to 40% of our assets in fixed-rate real estate loans. Currently, we’re at 21%. Having a real estate portfolio helped contribute to us being profitable through the bank crisis and recession. Used-vehicle loans make up
the next largest percentage of our loans. We do very well with refinancing loans from other lenders. We’ve had some successful campaigns to promote our credit cards, which are 10% of our loans. Besides personal loans, unsecured loans include overdraft lines of credit
and outstanding courtesy pay loans. Our loan totals are $21 million, which is an increase of $2 million in the last two years. Even though our shares continue to grow, we’ve also had great improvement in the growth of our loans. Loan interest makes up
59% of our income. Our goals have been to increase that figure by increasing risk, by marketing, and by adding new products. We’ve been pretty conservative in the past with granting loans. We’ve had risk-based pricing in effect for quite some time, but we tended
to loan mainly to A+ and A paper. By lending to the lower-grade paper, we’ve been able to increase our loans as well as our income. We still maintain good underwriting and have very low delinquencies. With being a low-income-designated credit union, we had to change our mindset
so that we make sure that we’re serving all of our members. 16% of our income is from investments, and fees make up 11% of our income. And about 50% of that fee income comes from courtesy pay fees. Courtesy pay is a program where members are allowed
to overdraft their checking accounts up to $300 and pay a $25 overdraft fee for the item to be paid. Other income is primarily made up of debit card and credit card interchange. One of our strategies has been to promote our credit cards, which can be a very
profitable program. We’re taking advantage of a marketing program specifically for small credit unions that don’t have the time or the resources to do it on their own. The marketing plan is set up for the year with promotions that are known to work. So far we’ve had great success with
this. These are some of the promotions that we’ve done so far this year. At the beginning of the year, we had a balance transfer promotion with a 2.99% interest rate for 12 months. We had an automatic credit line increase. And we had a direct mailing to members who didn’t
have our credit card, pre-approving them for a line of credit. Our outstanding credit card balances have increased by $274,000. Total lines of credit have increased by $1.8 million. And total credit card revenue has increased by $9,400 in the first
quarter of this year. We also offer shared secured credit cards for members who need to establish or reestablish their credit. Our first mortgages are processed and serviced by Owners Choice. We can choose to keep or we can sell a mortgage.
The majority of mortgages are kept in our portfolio. HELOCs are processed in-house and maintained in our portfolio. Auto lending is an important part of our loan makeup. We have a lot of competition in our area. We’ve looked into indirect lending, but it doesn’t
seem to fit our credit union at this time. We do a better job at recapturing the loan after it’s been financed at the dealer. We also do well with financing used vehicles, and we’ve had success with refinancing vehicle loans from other lenders. We’ve had different promotions for auto
recapture. We’ve done promotions for our members only; we’ve tried promotions for the community; and we’ve also done a combination of the two. Our loan officers are also very good at bringing over vehicle loans by cross-selling when a member applies for another type of loan. The
Credit Builder Auto Loan is a fairly new product designed for members with limited or no credit history, including our younger members. This slide shows some of the criteria for this loan. As you can see, no credit history is needed. They must have two
years of employment. The maximum loan is 90% of the value, up to $15,000, and at a rate of 9%. We monitor these loans very closely, and we contact the member immediately if the payment is not made on time, and we stress to them how important this is for their credit
score. We also have a prize-linked savings account. Ours is called the Lucky Savers, and it’s through the New York State Credit Union Association. I won’t go into a lot of detail, since it’s very similar to Jerry’s credit union. This is becoming a very popular program, and we’ve
seen a lot of members become very dedicated to making their deposits into these accounts. We’re becoming much more engaged in our community and in our schools. At Christmastime we had a mitten tree at each branch, where members donated mittens, hats, and scarves. The items from
our town of Niagara branch were donated to a local school, who in turn asked us to speak at a new program that they had started, called Dads and Donuts. We also had staff speak to some classes at this school about savings and checking accounts. We’ve provided material to high
school classes, and we give out college scholarships to high school seniors each year. This slide shows some of our community activities. We sell candy bars throughout the year, and the proceeds to go to the Child Advocacy Center. Our staff has also donated Christmas gifts
to children through the center. We sponsor events in the community, such as a softball team and local events. This is the second year that we’re a sponsor for Music Mania Mondays, which is a summer concert series in our town. We also collected donations for Stockings for Soldiers,
and some of our staff went to a local Tim Hortons and bought coffee for customers while promoting the credit union. These are some of the strategies that have been key to Greater Niagara’s growth. Our priority has been to increase loans through taking on more risk while maintaining low
delinquencies and charge-offs. Credit card growth through promotions has been very successful. We’ve received a lot of new members through bank transfers when they become unhappy with the banks. Right now there’s a bank in our area that is being bought out, so we have a campaign planned for this
summer to promote our local connection. Through our last merger, we were able to increase our assets and maintain a branch. So what’s on the horizon for Greater Niagara? We’re looking into a payday alternative product. Since we’re low-income designated, we feel that there is a need
for this product in our area. We have mobile banking, and we would like to add remote deposit capture. We’ve talked of putting a branch in the city of Niagara Falls in the future to reach more low-income and underserved people. We’d like to partner with more community groups, and
attracting younger members is another important goal. As we grow, our top priority is making sure that we have the right products for our members. This slide shows some of our members and staff at our town of Niagara location. Thank you very much. Vanessa Lowe: Thanks so much, Carolyn. Great information. We’ve got another
poll coming, so be prepared to answer a question. But just wanted to point out a couple of things Carolyn talked about that you may want to ask questions about, because we encourage your questions. She said that 44% of her assets were in fixed real estate. I think some credit unions may be surprised that credit unions are doing
first-mortgage real estate, but the fact is, if you can sell it off and get it out of your portfolio, that can be a great product, so I’m glad we’ve got a couple of credit unions who are doing that. She also talked about it’s really hard, and we hear this a lot, that credit unions feel like they can’t compete
with the dealers. But she has an auto recapture program, and that may be something you want to consider if you’re not doing that yet. She also talked about a Credit Builder Auto Loan. Interesting. I think that goes along with her credit union’s willingness to increase their risk a little bit. Like she said, it has to be monitored. So anyway,
again, encourage you to ask questions of our speakers. What a great opportunity to hear from three different credit unions. So the question for poll number three is, how do you monitor your strategic planning goal? It’s a little bit of a heads up that our next speaker really believes in strategic planning. So do you monitor those
goals monthly during your board reports and board meetings? Do you review them about once a year or less? Or do you not monitor them at all? And, again, for those of you who are not with a credit union, you can choose “not applicable. ” So here’s your opportunity to do poll number three. And I’m going to ask for Kathryn’s
help one more time to get those poll results showing. Kathryn Baxter: Okay, let’s give them two, three, four, five more, six, seven, eight seconds. Here we go. Vanessa Lowe: (laughter) Nine, ten, 11, 12. (laughter) All right, so good job. 66% use them at their monthly board reports. Great, that means
they’re not just sitting on a shelf. It says review once a year or less, that’s 24%. We don’t monitor them, 2.2%, so we may be talking to the converted already. But definitely you want to be monitoring those on a regular basis, and change as needed, right? All right, let’s continue on, and we’re going
to hear from Judy. Judy Carrasco: Thank you again, Vanessa. As with Jerry and Carolyn’s presentations, ours also begins with our web page. Our page is set up to provide an instant glance on what Financial Security has going on right now. It’s fashioned so the information is only one click away. At the top
of the homepage, we scroll current events to drive our members to click on the link below for further details. We try very hard to stay current. Our homepage is updated at least monthly. We also have a Facebook presence that we update at least four times a week, and if we advertise anything on
Facebook, we send the viewer back to our homepage for more information. We’ve made YouTube videos that are linked to our homepage in the past. We have multiple lobby screens located in key areas of the credit union, such as over the teller line and in loan waiting areas. And we do a little radio
advertising and a little print. However, what print we do is more in periodicals than in newspaper advertising. Since our younger members want information via their cell phone, we are trying to do more and more text communication and text marketing. I’ll have to let you know how that one goes. It’s probably
just me, but I think Financial Security has such an interesting beginning. We were chartered in 1954 as Carlsbad School Employees Credit Union. The credit union was started by two teachers that saw a need within their employer group. They recruited nine original members with total assets of $300 and
never looked back. The original field of membership remained virtually unchanged, serving only those working within the education system until about 2002. Since then, the credit union has received our low-income designation, gone through a name change, obtained a community charter, and
built two new locations. In 2001 when I began, the credit union was $7.9 million in assets, and today we’re $42 million and offer a full array of consumer and electronic products. Through strategic planning, our board of directors and management team
elected to set our minimum capital ratio at 11.5%. As of April 2016, our capital is 12.5% and has stayed above the 11.5% minimum for the last five years. When I was hired in 2001, I came to the credit union following a tenured manager of 30 years. I
had some pretty big shoes to fill. I had worked for 20 years on the dark side, as my friends now tell me, and I had extensive banking experience in lending administration and operations. But I truly believe it was my experience in marketing that got me hired. I had already
successfully completed several endeavors, including branch openings and product development in both operations and lending products and services. As the CEO, from the beginning, I have believed in and tried to instill a collaborative philosophy and shared leadership. I believe that my team
moves as one, whether forwards or backwards. We support each other and must understand the direction that we’re traveling. That’s where I believe that strategic planning is critical. I have always involved my entire team, frontline staff up through management, in developing goals, growth
initiatives, and product development. In 2015, Financial Security hired a dedicated marketing employee and has committed to a three-year training plan with this individual. The decision was made to develop this position through a strategic initiative. Our hope is that through this position,
Financial Security will be an even better community partner and ambassador for Eddy County. We’ll talk more about this position as we move on. I’m very blessed to have such a great group of volunteers. I have a five-person board, and no, I am not on the board of directors. There are two men
and three women, and their ages range from 35 to 69. Their tenures range from two years to 14 years. All were chosen for a particular strength that they would bring to the board, like knowledge in real estate development, IT and computer science, private business practices, and education
and community service. And my three-person supervisory committee is just as talented. Tenure with this group is ten years to 14 years. My supervisory committee attends training each year for two full days. They are very involved and have even been asked to develop trainings at the state level. I
couldn’t be happier to have such a good group of people helping Financial Security. Before we dive into our loan portfolio, it’s important to understand the dynamics of Carlsbad. The population of Carlsbad and surrounding areas is about 35,000. Within this community, there are nine financial institutions, with 16
different locations. So when a loan application comes in, we have to be ready to jump on it, because there’s a lot of other places to go to conduct business. Financial Security does consumer lending only. We do not do any commercial and we do not do any real estate, at this time. The bulk of our lending
is done in auto loans and in our unsecured portfolio. We have offered credit cards for about two years and continue to work to grow that portfolio. Financial Security has always maintained that we know what we do well and we stick with it. Although we have looked into first real estate mortgage lending, and even commercial
lending, we have not found that jumping-off point. We have completed a feasibility study that does indicate that HELOCs would be a great addition to our consumer lending product mix, so the credit union plans to move forward with this product. Currently, as you can see, our loan yield is at 6.22%. One strategic
initiative that Financial Security did institute several years ago is that all of our loan officers are required to be certified financial counselors. All of our loan officers have received this certification through CUNA’s FiCep program and recertify every three years. The strategic decision to require
this certification was made in an effort to give our loan officers the tools that they would need to help our members in financial distress. When the crisis is recognized through the underwriting process, the loan officer can move forward to help with a solution. This is a powerful tool, and it works
well for Financial Security. As you would expect, the majority of our income comes from our lending portfolio. Lending interest and fees makes up 84% of total income. Financial Security does not do any complex investments. We keep things pretty simple and only buy insured certificates, hence the reason for
such a low rate of return compared to the other categories. An interesting observation on the operations side of things is that our total income from operations, 53% comes from ATM fees. That’s thanks to all the tourists visiting the Carlsbad Caverns. Strategically, Financial
Security always wants to maintain positive ROA. Who doesn’t, right? But personally, I want ROA above 1% all the time. Several years ago, and I mean several years ago, I had this horrible realization that a large portion of our money was in accounts over 70 years old.
It was then that we added an entire category to our strategic thinking – our youth accounts. We began, back in 2003 or ’04, working to build those youth accounts but got very aggressive in 2008 when we formed a 12-person youth advisory board. This advisory board of 13- to 18-year-olds
developed a line of products and services tailored just for their age group. We also started on the other end of the spectrum – adding a youth account for infants through kiddos three years old. Our thinking was to bring new mothers and babies in and cater just to them. This strategy
has worked. New parents like that we have something that’s just for them and their newborns. Strategically, we continue to work on all three of our youth clubs to add new products and services and just grow that demographic. Financial Security has been recognized by the Credit Union Association of New
Mexico, as well as our local community, for our work in products designed by and for our younger members. I have even had the pleasure of speaking at different conferences about the successes and the failures that we’ve experienced working with the youth at the credit union. For many of us, these accounts
are goldmines yet to be discovered. And here’s a picture of our Kirby Kangaroo Club at a movie event that we had in the fall. And then we have different events that you can see here, where our young adults come and participate. Financial Security participates in strategic planning every year in October. At
minimum, we hold two sessions – the first with the board of directors and the management team, and the second meeting is facilitated with the staff. All staff members are invited to attend, but it is not required. The meetings are identical in scope, meaning the same agenda is presented to both groups
of people. As the CEO, it’s fun for me to see just how in line the staff is with the direction of the board. It just validates that we’re all moving in the same direction and have the same goals for the credit union. This year, since we now have a dedicated marketing person, we held a third strategic
planning session that was only for marketing. The goal of the marketing strategic session – how can marketing help to achieve the goals and initiatives set by the board and the staff? It’s important to note that the volunteers and staff were also invited to this session to have a voice in setting marketing
initiatives. The final strategic plan that is presented to the board for approval includes input from all three sessions. Now we have to work that plan. So each month, the strategic plan is reported to the board of directors, including where we’re at overall in achieving the goal, highlighting
what’s been completed in the last 30 days. This accountability keeps the plan from going into a drawer and not looking at it again for another year. So now let’s talk about some of the strategies that are included in the plan. Another strategic focus is lending, how to
improve and grow loans. Over the years, we have had several auto sales with local car dealerships. But in 2015, after we opened our South Branch location, we finally had the room to invite the dealership to set up a remote lot at our new location. So now, each May,
for a week a different dealership sets up a mini car lot, if you will, at our South Branch. They are there for six days, Monday through Saturday; have salespeople available on site; and together we sell and finance cars. All advertising expenses are shared between the credit union and the
dealership on a 50/50 basis. Strategically, the goal that we set for the sale each May is determined by our liquidity and by our local economy. And as you can see, in 2016 our goal is half of what it was in 2015. That’s due to the downturn in the economy here in Eddy County. But we
always need teachers, and last year the credit union was contacted by school administration and asked to partner with us on a new teacher loan. This loan would be for teachers new to our district, moving to Carlsbad. The loan is designed to be an instant-approval loan, up to $1,000 for
classroom supplies or moving expenses. There is no credit bureau report required, and the term is determined by the length of their first-year contract. Therefore, teachers moving in at the beginning of the school year would have a payment based off of a 12-month contract. However, teachers coming in midyear would
have a payment based off of the number of months remaining in the current school year. I would have to say, we don’t have a lot of these loans on our books; however, the goodwill from this loan has been overwhelming. Remember, we started as a school credit union only, and there are still a lot of those teachers out there
that remember that, and we remain their credit union. Now, here’s where the commitment to my marketing person is paying off – Fun Fridays. Ashley, the blond in the picture, has never met a stranger. She started Fun Fridays, where she and another staff member go to a business and take donuts or cookies or
just whatever, and she tells them about Financial Security. Or, if they’re already a member, she tells them about new products and services and answers questions. The ultimate goal of Fun Fridays is to get a lunch-and-learn scheduled. And you saw the banner for our lunch-and-learn on the very first slide. Lunch-and-learns
are just that. Ashley takes lunch to the business and sits down with their staff, on their time, and provides them with tons of information about the credit union. A lunch-and-learn is about 45 to 50 minutes, so there’s not a lot of time to do anything but answer questions. So she will leave them with a new account packet full of current
information and invite them to come back in and open up an account with us. We have had a lot of success with this, and we are also receiving fantastic feedback about the whole lunch-and-learn experience. One of our proudest objectives to come out of a strategic plan with the staff is our Be Known for Something campaign.
This campaign is called just this because I sat in a strategic planning session with an employee that looked me right in the eye and said, “I want to work at a place that’s known for something, like doing good deeds to help people or volunteering in our community, not just a credit union that wants to make
money. ” And that really hit home with me, because I wanted the same thing. So together, we came up with this campaign, where Financial Security donates 100% of our loan documentation fee earned each July to charity. The nonprofit charities are determined first by the staff. A staff member can submit as many
charities on their list as they want. After everyone has submitted their choices, the top three vote-getters are the recipients. We than make posters for each of the loan officers’ desks and ask the member at the time of the loan closing to choose the charity that they would like for their loan fee to go to. The
nonprofit is not even aware that they have been selected to receive this money until we show up. It’s a great experience to be able to hand them a check when we have so much need in our community. Here are some past recipients that have received that donation. In an effort to get out into the community
more, we’re working to establish different community partners. So far we’re working with local coffeehouses, providing them their coffee sleeves; and also working with doctors’ offices, providing them pens for their lobbies. This action is in an effort to be more visible
in our community, and we are always looking for more community partners. On the horizon for us – on the loan side, our 2016 strategic plan has us looking into a HELOC product, as we discussed earlier. We will also be looking into a short-term payday loan alternative, and possibly a student loan product.
On the deposit side, we’re interested in developing a Save the Change checking account where the member’s transaction automatically rolls up to the next even number and deposits the difference into the savings account. We’re still working on this one with our core vendor. We are interested in learning more about instant-issue debit
cards and possibly a scan-to-pay enhancement to our current RDC product. Thank you so much for having me today. It’s been a pleasure visiting with you. Please let me know if you have any questions. Vanessa Lowe: Thank you so much, Judy, and yes, please submit your questions to Judy. Let me go ahead and let’s
do the fourth poll. The question is, which of these factors hinders your growth? Is it no specific strategic plan goal, not monitoring plan goals, field-of-membership limitations? So a lot of credit unions say, we just can’t compete with car dealers; expense is too high; or not applicable. We’re going to give
that about a minute to get your responses. In the meantime, let me just remind you of a couple of things Judy talked about. She started with her focus on strategic planning, and she described her process. I wonder how many of you are going through that. That’s a pretty detailed process, essentially three different large-scale
meetings. Also, she talked about her certified financial counselors, that all of her lenders have that certification. She has a strategically placed ATM. How lucky is that? Not something that everybody can have, but certainly helpful. And her youth accounts – that sounds like they put a lot of energy into helping young members
come into the credit union. So just a couple of things, but please, submit your questions. And Kathryn, you think we’re ready for those answers? Interesting. All right. Wow, so we still got a lot of folks who feel like they can’t compete with the car dealers, but, again, I think Carolyn talked about maybe using
a recapture program. Field-of-membership limitations, 39% of you feel like that’s definitely getting in the way of your growth. And expense is too high. Yeah, so we’ve definitely got some challenges here, but remember that the Office of Small Credit Union Initiatives has 16 different economic development specialists.
Those of you who qualify can request assistance through that consulting program. Also, we have a body of more than – gosh, I think we’re at least up to about 35 different webinars now, covering all sorts of topics. And videos, yep, we’ve got several video series now. So please use those.
Before we get into the Q&A – I’m going to steal a little time from the Q&A, because I know we’re at our time almost. I want to talk about some data that I pulled to look at fee income. Before we get there, let’s talk about some growth takeaways. So what we’ve heard and what we know is, good loans are the key to grow.
You need to stay in front of your members. We’ve heard from different credit unions. I love the pens and the coffee sleeves. That’s really great. You need to keep a presence in the community. Understand your strengths. I really appreciate credit unions who are like, “We’re just not ready for X, Y, or Z.” You need to know what your strengths are, maximize those,
but don’t get into something that you really feel like you don’t have the capacity to offer. What you can do, though, is figure out how to get that capacity. And we’ve been talking about this throughout, setting your growth goals and monitoring them. So remember that every large credit union was once a small credit union, so small credit
unions can grow. So one of the things that I noticed was that, of the three credit unions profiled, the smallest percentage of total income was 7%. 7% of that total income came from fee income. And I think one of them was at 19% for the larger. So I pulled some data. This first slide shows,
essentially taking all credit unions, what is the average of the fee income as a percent of total income. And you notice, as you go from the smaller credit unions, the first line is those that are less than $10 million, it’s just 11.98%, which is actually – some people may consider that to be fairly significant.
It goes up as high as 17.96% for the credit unions that are between $100 million and $250 million. It’s interesting that as they get very large, it goes back down to 12.81%. That’s for those that are greater than $250 million. On the next slide, then, it just breaks it out by low-income designated versus those that are not low-income designated.
So I point this out because I know I’ve certainly come across a lot of credit unions who feel like, “Well, we don’t want a fee, we don’t want a fee. ” But the fact is, because of the various factors that affect how much you can charge for the loan versus how much it costs you to make that loan, it’s really
hard to make a decent profit just on the lending alone. So developing an appropriate level of fees is absolutely acceptable and really necessary in order to grow. So just wanted to point that out. And last, I want to remind everybody about their certificate. Remember those two magenta tools at
the bottom? One will tell you how close you are to achieving all you need to do to get the certificate, and the next one is the actual quiz. I’ll turn it over now to Kathryn. Kathryn Baxter: Thank you, Vanessa. Vanessa Lowe: Oh, one more thing. I apologize. Here’s our little advertisement. We are having a webinar on June 23rd.
I forgot about this. The topic is CDFI certification. What’s on your screen is the press release that went out. The CDFI Fund is partnering with US Treasury’s Community Development Institutions Fund, and we’re essentially trying to ease the process for credit unions to become CDFI certified. And CDFIs are those
financial institutions that are truly dedicated to serving the underserved, and if you become CDFI certified, there’s an opportunity to get significant funds to support service to your underserved community. All right. And now I’ll turn it over to Kathryn. Kathryn Baxter: Are you sure? Vanessa Lowe: I’m sure.
Kathryn Baxter: Okay. (laughter) All righty, so we’re going to push out the survey to everyone right now. See it on your screen? Please take the survey for us, we really want to know what you think, while we go into the Q&A. We also have another webinar that’s coming up on the 22nd that’s going to deal with accounting
tips. We’re going to address some very important issues for credit unions, small credit unions in general, when it comes to internal controls and accounting. So you don’t want to miss that. Go to our website,, and you can go into the Small Credit Union Learning Center on the bottom left and register for all of our upcoming webinars. We’ve got
some great questions, Vanessa, for your speakers. Vanessa Lowe: I’m looking at them. That’s great. Kathryn Baxter: Yeah, we really do. Vanessa Lowe: And keep them coming. Kathryn Baxter: Yes, keep them coming. But we’re going to start with – let’s see. Jerry, you were the first speaker, weren’t you? Jerry Wise: Yes. Kathryn Baxter: Okay, so that means we
get to give you the first question. Are you ready? Jerry Wise: I am ready. Kathryn Baxter: All righty. If you want to look in your folder, Jerry, we’re going to take the question from the credit union – let’s take the first one. So they said, Jerry, why did you change from a state charter to a federal
charter? Jerry Wise: There’s a lot of reasons for that. A couple I probably won’t get into today. I mean, really, part of it was the strategy of the state at that time, when we were looking at it. Probably wasn’t in agreement with some of the things they were doing. Other things,
there was benefits. We have to pay sales tax. You don’t have to pay sales tax if you’re a federal charter. And there was some other exam issues with – between the – actually, not between us, but between the state and the NCUA, that also played a role into that. Actually, that was after the fact,
but it still was a benefit there. That was really the gist. I mean, I would be more than happy to get into more detail on a probably individual basis on that one. Kathryn Baxter: All right. So let me give you another question too. So the same credit union wants to
know whether or not you pay any additional incentive for your mortgage originators. Jerry Wise: We do not. And actually, the majority of that is our base wages overall are pretty high compared, I think, to the market. And plus we have huge
benefits, great benefits packages for our employees and our – so our employee cost is already relatively high. And so we didn’t see the need for having to do the origination incentives on that. Kathryn Baxter: Okay, Jerry, sounds good. Stay on the line. We have a few more questions for you,
but we’re going to bounce over to Carolyn. Carolyn, you ready for your first question? Carolyn DuBois: Yes, I am. Kathryn Baxter: All right. So I think you had some individual very interested in your Lucky Savers program. Were you able to provide the URL for that? Do you know
the link? Vanessa Lowe: I’ll answer that one. So it’s Save to Win, S-A-V-E-T-O-W-I-N, dot org is the main overall site, and I think it’s monitored by Doorways to Dreams that kind of developed the program. And so there you can find all the states that participate, and if you click on that link that shows you the states, then it’ll
show you all the credit unions that are participating. Kathryn Baxter: Well, thank you, Vanessa. Vanessa Lowe: You’re welcome. Kathryn Baxter: You still ready for another question, Carolyn? (laughter) I have another question for you. Ready? Vanessa Lowe: Did we lose Carolyn? Kathryn Baxter: Did we lose Carolyn? We might’ve lost Carolyn. Well, let’s jump over to Judy. Judy Carrasco:
I’m here. Kathryn Baxter: Judy, are you there? Judy Carrasco: Yes, I am. Kathryn Baxter: Okay, Judy. Here’s a question for you. So here’s what a credit union wants to know. If you look in your box, you’ll see it says, do you meet offsite for your planning sessions with your board? Judy Carrasco:
Every two years, the credit union takes the board of directors offsite for strategic planning. So the answer to that would be yes, but we only do it every other year. Kathryn Baxter: Okay. And so another credit union wants to know about your feasibility study,
how that worked. Judy Carrasco: Well, we started with polling the membership. So to be successful with that, it actually took us a couple times polling the membership on what products and services that they felt like they would use and that we do not offer.
So we started there, then internally we built just on paper a program that we felt would work, and then from there went to our vendor to make sure that the program the way we built it would work. Initially, I had some errors in there, and it did not, but we feel
like we now have all of the kinks worked out where we could move forward with it. Kathryn Baxter: Awesome. Very good. Okay, do we have Carolyn back? Nope, we seem to have lost Carolyn. Well, I’ll give a question to our other two speakers that
are on right now, while Vanessa tries to get Carolyn back. So here’s what one credit union wants to know. If you would share who you are using – well, not that one. Let’s do this one. The credit union wants to know if
you are a community-based credit union or SEG-based. And if so, did you become a community during your grow period? So you want to answer that first, Jerry? Jerry Wise: Sure. Currently, we are a SEG-based credit union. But like I mentioned during the
presentation, the one thing we’re in the process of doing now is trying to expand into the underserved area of our county, of Guilford County, which gives us geographic field of membership – it’s very similar to community charter, except it’s more limited to those defined as underserved. So for our purpose of what we’re
looking for, that’s going to give us plenty of geographic area to work in in that area, but we are still a SEG-based credit union. Kathryn Baxter: Okay, what about you, Judy? Judy Carrasco: When I started in 2001, we were SEG-based, and in – I believe it was in 2006 or ’07, and that’s
horrible that I can’t remember. We did go – we started expanding our field of membership, and we are now community. Kathryn Baxter: Okay. Sounds good. All right, let’s jump back to Jerry. So here’s a question, Jerry, for you. So the
credit union wants to know how you went about establishing your business relationship with Fannie Mae. Jerry Wise: That relationship came together as part of our relationship with our mortgage processor, Neighborhood Mortgage Solutions. They assisted
us in getting that relationship set up and being able to sell to them. And actually, a lot of our communications go through our mortgage processor vendor. And that’s a huge part of our success, is the partnership with them and what all they do for us in that program.
We really have to focus on the origination side of things, and they pretty much handle everything else on the back side. Kathryn Baxter: Okay. So on the same vein, Jerry, did you have a first mortgage program before that? Jerry Wise: Not here at this credit union. I was familiar with them. I had worked
at a couple other credit unions, and they both had mortgage programs, so I was familiar with the ins and outs and the benefits of what they could provide for a credit union if they are set up appropriately. And so that’s kind of where my knowledge of mortgages came from. Kathryn Baxter: Okay. Very good. Let’s go
back to Judy. Judy, you still there? Judy Carrasco: I am, yes. Kathryn Baxter: All righty. Here’s what the credit union asked. They said, which auto loan recapture program do you use? Judy Carrasco: We do not have an auto loan recapture program. Kathryn Baxter: Okay. Judy Carrasco: We’re just out there (inaudible) on the street
for the loan. Kathryn Baxter: Okay. All righty. Carolyn DuBois: I think that was mine, and I got disconnected. I just came back on. Kathryn Baxter: There you go, welcome back. Okay, Carolyn. Carolyn DuBois: Hi, thanks. We do have several different auto loan recapture programs we’ve used in the
past. We’ve gone through a marketing company. And the way it works is we send out letters to mainly people in our community, telling them that we could give them a lower payment if they refinance their auto loan with our credit union. We had a mini app on there.
We had gone through a credit bureau, and we gave them criteria for people we were looking for, such as a certain credit score and higher, whether we would accept anyone that had a bankruptcy, a minimum car loan amount that they have on their
credit report, things like that. And then they would send back their applications to us. We would work it up. And I think especially when we started it maybe six or seven years ago, we had a really, really high response, because at that time the auto loans
out there were much higher and ours were a lot lower, so we had a lot of new members and a lot of new loans from that. We also last year went through CUNA. They have a program, and it’s specifically for your credit union members. So that one didn’t get quite as much response, but
that one also works. Kathryn Baxter: Okay. Very good. So since we lost you initially, I had a couple of questions that I wanted to give you. Here’s a question that a credit union wanted to know. How would you market for students at a nearby university?
How did you do that, or did you? Carolyn DuBois: We didn’t. We have – Kathryn Baxter: Is that Judy? Okay. Vanessa Lowe: [In fact], Judy, you’ve got some young folks there, so how did you get the young folks? Kathryn Baxter: Did you do it? Judy Carrasco: We have
marketed to a local university here. Fortunately, it’s just right down the street from us, and many of those people are members, so we did it, at the time, simply through print marketing, posters and things of that nature. Like I said in my presentation, we are just now beginning to
experiment with text marketing. And we’ve been told directly from those younger members that that’s their preference. So we’re trying to use that more and get better at it, but before, it was mostly through print advertising. Kathryn Baxter: Okay. So let
me go back to Carolyn, and let me ask you a question I think is your question. So the credit union says, how were you able to get your board receptive to community connections? Because apparently they’re having a problem convincing their board to do so. Carolyn DuBois: I really didn’t
have a problem with my board. I think they’re the ones that brought it up quite often, and they really believe that we need to have a presence in our community. I think we’re fortunate that our board has people from different areas of the community. They’re in different
professions. And I don’t know how to tell you to do it if your board isn’t on board, because I was very fortunate that my board thinks that it’s very, very important to have our name out there, even if it is just having the sign up. We have a bus bench in the area that people drive by. They can see our sign. I
think if they get familiar with us and they see your name that it helps promote your credit union. Kathryn Baxter: Well, let’s talk, then, to the other speakers, too. What about you, Judy? Let’s take you first. Judy Carrasco: Is that whether my board supported going out into the community? Kathryn Baxter: Yes, correct.
Judy Carrasco: My board was very supportive, but keeping in mind, again, the focus of Financial Security is so strategic that it is in our plan. And when you have your volunteers and your management team and your staff that work together
to build this plan, that buy-in exists from the very beginning. And everybody understands that per that strategic initiative, that in order to meet our goals, these things – they need to be done, and they’re agreed on ahead of time that it’s going to
happen. So not only do I have buy-in, but my volunteers helped to build that initiative. Kathryn Baxter: Awesome. What about you, Jerry? Jerry Wise: Yeah, there’s really been no problems with that. I mean, that’s one – the board probably pushes – they always push extremely hard to make sure we’re doing as much as
we possibly can, to make sure we’re giving back to the community and doing the things that we need to be doing. Especially with our upcoming expansion, we’re really looking to even take that to the next level and really get in touch with a lot of the community leaders and work closer with them to see what the true needs of
that area really are so we can probably get a little bit more involved with them at that point in time. Kathryn Baxter: Excellent. All righty, let’s jump to Carolyn. Here’s a question that the credit union had for you. They want to know how the no-credit-score
program worked. Carolyn DuBois: Our Credit Builders – we found we had some young people coming into the credit union. They had been working. They had never established credit. Yet we weren’t able to give them an auto
loan. So we developed this program so that we’re taking more risk, because there is no history of credit, and we monitor it much more closely. We do have a set – this is the only loan that isn’t risk based. It’s
a 9% interest rate. We do require they have some equity in the car, so we lend 90% of the NADA book. And we’ll go back ten years as far as the age of the vehicle. Kathryn Baxter: Okay. So to piggyback off of that, one
question comes in about what the default rate is for no-credit-history auto loans. Carolyn DuBois: It would be the 9%. Kathryn Baxter: 9%? Okay. No, no, no – Carolyn DuBois: Oh, I’m sorry – Vanessa Lowe: – the default rate, Carolyn, like how many you’re writing off. What’s the –
Carolyn DuBois: Oh, how many we’re writing off. I’m sorry. Vanessa Lowe: And charge-offs. Carolyn DuBois: Right now, as far – so far, we have one that was repossessed, but they are paying to get the car back, so we haven’t charged off any. Kathryn Baxter: Okay, good. That was a pretty good default rate there, 9%. I’m just kidding. (laughter) Carolyn DuBois: I’m sorry, I
misunderstood what rate you were asking for. (laughter) Kathryn Baxter: Okay. Everyone here almost went crazy, you just have no [idea]. Vanessa Lowe: Like, “Wait a minute. ” Kathryn Baxter: I know, right? Carolyn DuBois: Sorry. (laughter) Kathryn Baxter: Okay, let’s bounce back again. Carolyn, you’ve been on the hot seat long enough. Carolyn DuBois: Yeah. (laughter) Kathryn Baxter: Okay, let’s
bounce over here and speak to Judy. So Judy, here’s another question about your strategic planning. The credit union wants to know if you use an outside facilitator. Judy Carrasco: Yes, we do. We have used several facilitators over the years. For the last several years, my board has developed a very tight relationship with a New
Mexico-based company called Business Evolutions. And we have used that company for the last several years. Kathryn Baxter: Okay, great. You also have a credit union here that’s pretty interested in the mini car lot and the teacher loans. Did you provide your contact information, Judy? Do we
have it? Vanessa Lowe: I’ll do an advertisement for that. So under the Resource tab, you’ll find bios for everybody, including their contact information. Kathryn Baxter: Okay, awesome. Let’s jump back to Jerry real quick. Jerry? Jerry Wise: Yes. Kathryn
Baxter: So here’s a question. The credit union wants to know how you communicate that you are hosting a seminar. Jerry Wise: Like I mentioned at the very beginning, we do a lot of email blasts, because we have a huge percentage of our members’ emails, and
actually, that’s how we – we submit them that way, along with internal lobby advertisements on our digital displays. But mainly those two channels are the big one. And actually, even our email blast is how we get the biggest percentage response from any auto – or any loan promotion, actually.
Kathryn Baxter: Okay. So now here’s a question for all three of our speakers. We have a credit union that asked the question, they said that they’ve struggled for years to increase their loans. Any suggestions on how to increase loan volume? Judy Carrasco: Well, this is
Judy. I would say the very first thing and the easiest thing is goldmine your credit bureau report and see if there’s potential there to move existing well-paying loans into your portfolio. Kathryn Baxter: What
about you, Carolyn? Carolyn DuBois: I think that’s been one of our biggest strategies, is taking on more risk by lending to other than A and A+ paper. Again, we haven’t had any higher
delinquency by doing this, and the loans are paying better, and the loan volume is better. Plus I think our credit card, expanding our credit card program is really paying off for us. Kathryn Baxter: Awesome.
What about you, Jerry? Jerry Wise: Yeah, I agree a lot with Carolyn. We’ve got not a huge penetration in C, D, and E paper, but we do have a large – quite a few loans there. And that has really helped us with our volume. We’ve got a
great mix across the board. Really looking at the process that your members have to go through – is it easy, is it convenient, is the product competitive with the marketplace? Those are a few things, without knowing the whole scenario behind that question. Yeah, that’s a tough
one, but a great question. Kathryn Baxter: Okay, wonderful. So this last question I’m going to give to all three speakers again. The credit union mentioned here that each of you had a merger in your history. So can you offer some dos and don’ts for your process, for your experience there? Judy Carrasco: Well, this is Judy again – Kathryn Baxter: How about we start with
– Judy Carrasco: – and we’ve never had a merger. Kathryn Baxter: – Judy, yeah, we’ll start with you. You never had a merger. Okay. Judy Carrasco: Yeah, so mine would be no, I can’t, sorry. Kathryn Baxter: That’s okay. Carolyn? Carolyn DuBois: We’ve had different mergers. I think one of the first – when we had kind of an equal credit union,
that was a fairly easy one because we – it was more of a mutual merge. We were on the same page. We had pretty much the same assets, the same net worth. Our last merger was a little more difficult, with a credit union that was looking to
merge. And their manager was retiring, and there were some different issues. So do your homework. We did a lot of research into that particular credit union. We crunched a lot of numbers as far as combining numbers, how
it would affect our net worth. Like I said before, we were at 14%, and it did drop us down to almost 11%, so we felt we were able to take that on. And in the long run it ended up being a very good move for us. Kathryn Baxter: Wonderful. What about
you, Jerry? Jerry Wise: Here at Greensboro, we’ve not been through a merge. I mean, I’ve been through some in the past. And really looking at the credit union and looking at the loan portfolio, making sure there’s no hidden landmines there, I guess, so to speak, is very important. The other part is making
sure the staff is well integrated, that you can get the cultures to mesh, and that’s probably the biggest problem that I experienced when I went through it, was just – we were only a few miles apart, but the cultures were extremely different. So the more you can do to mesh those two together, the better off you’re going to be. And then just making
sure that the members realize that it’s a good thing, it’s a win-win for everybody in there. And hopefully you take the best of both worlds and put them together. Kathryn Baxter: Sounds good. Well, we’ve come to the end of another webinar. Thank you so much. Thank you, Vanessa, for being our host.
We thank our speakers, Carolyn, Judy, and Jerry. Thanks to Franz, who helps us out on the IT side. And we’re going to see all of you hopefully on the 22nd for our accounting webinar. We’ve put our contact information in front of you. Please go to, the Small
Credit Union Learning Center, and look for our training events so that you can register for the accounting and internal controls webinar on the 22nd of this month. And then don’t forget the CDFI webinar on the 23rd. For Vanessa Lowe,
this is Kathryn Baxter signing off. Have a wonderful afternoon and a great week.

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