Winners, left to right, front row: Steven Owens, Consumers CU (Consumer winner, $250 million assets and above); Shamus McConomy, GTE Financial (Business); Richard Whitman, Texas Trust CU (Mortgage, $250 million assets and above); Crystal Tayes, Upper Cumberland FCU (Mortgage, $250 million and below); Jennifer Watson, Limestone FCU (Mortgage, $250 million and below); Tony Hale, Texell CU (Consumer, $250 million and below); Galen Burke, Texell CU (Low/Modest Means); standing, Bill Vogeney, Lending Council chair; Tom Keepers and Dan Murray, CUNA Mutual Group.
Six credit unions, including a double-winner, received Excellence in Lending Awards at the CUNA Lending Council’s 19th Annual Conference.
The Excellence in Lending Awards were established in 2000 to recognize credit unions that implement outstanding lending programs while demonstrating sound financial performance. The annual awards provide an opportunity for credit unions to share best practices and ideas, build networks, and recognize and celebrate lending excellence.
►CONSUMER – assets more than $250 million: Consumers Credit Union ($453 million in assets; 52,000 members)
Consumers listened to members during the economic downturn and developed a successful home equity product that benefited the credit union, but more importantly addressed needs of members near retirement.
The “Silver Lining” home equity loan program meets a need for near-retirees with good credit and equity with a desire to pay off their mortgages before retirement. A no-closing cost home equity loan, Silver Lining features three-, five-, seven-, and 10-year loans as low as 2.99%, allowing members to accelerate debt repayment and consolidate debt.
Consumers’ home equity portfolio experienced substantial growth since Silver Lining’s inception, with very low loss ratios. Member education keyed the success of Silver Lining, as staff helped members understand its value over simply refinancing a mortgage.
►CONSUMER – assets less than $250 million: Texell Credit Union ($227 million in assets; 30,000 members)
Texell identified weaknesses in its consumer lending program in 2008.
By developing new products and underwriting procedures, implementing a sales-driven, relationship-building culture, and by making a number of operational improvements, the credit union achieved the highest loan-to-share ratio in its history, including higher average loan balances per member and more members as borrowers.
At the end of 2007, about 22.9% of members were borrowers. By the end of 2012, that number increased to more than 51%. At the same time, average loan balances increased from $9,249 to $10,736. Also during that time, Texell switched from a centralized lending model to a hybrid, which pushed many loan decisions to the branch level.
►MORTGAGE – assets more than $250 million: Texas Trust ($764 million in assets; 57,000 members)
Texas Trust had a $61 million mortgage portfolio in 2006 that appeared sound, but in many cases the average income generated from each loan was less than the origination cost. Texas Trust stabilized its mortgage operation by aligning staff, improving efficiencies, and making sure it assigned the right people to meet the challenge.
With home equity loans accounting for more than 50% of its production, Texas Trust identified market needs and began marketing what turned out to be more than 100 first- and second-lien mortgage choices. The credit union utilized a variety of channels, including TV, print, digital and social media to proactively tell its mortgage story.
Those awareness efforts paid off, with member penetration for mortgage lending increasing from 2% to 15%.
►MORTGAGE – assets less than $250 million: Limestone Federal Credit Union ($38.5 million in assets; 4,000 members)
Limestone Federal's enviable financial ratios didn't satisfy the credit union in Michigan's Upper Peninsula. LFCU, serving low-to-modest income members, measures success by the financial stability of its membership, so staff rolled up its sleeves.
A deep dive into the credit union’s shortcomings and opportunities included polling members and rating products and services. LFCU emphasized educating employees on thrift, an aspect of consumer education that serves as a cornerstone of LFCU’s lending business.
When 10-year, fixed rate mortgages were offered, members thought they couldn’t afford them. But by educating them against the buy now, pay later mentality, LFCU put many members on a path to financial independence.
►MORTGAGE – assets less than $250 million: Upper Cumberland Federal Credit Union ($32 million in assets; 5,400 members)
Upper Cumberland Federal wanted to break out of a stagnant lending period and did just that via marketing, employee buy-in, and some innovative mortgage lending.
One such creative mortgage offering: a 10-year, fixed-rate product with a 3.99% APR with no origination fees for members that owed $75,000 or less on their home and had a minimum credit score of 680. The mortgage hit a special need in the community, as many members consolidated their debt into one payment. The mortgage special was so well-received that UFCU offered it for six months.
UCFCU believes firmly that all employees should have a stake in keeping the loan-to-share ratio and delinquency at desired levels, and financially rewards hourly employees when the credit union meets those goals.
►BUSINESS: GTE Financial ($1.6 billion in assets; 202,000 members)
GTE Financial's business loan portfolio leaned heavy on large commercial loans on hotel property during a collapsing economy. Foreclosures on these mortgages threatened the existence of the credit union’s business lending operation, so GTE Financial decided to reinvent the business.
In October 2010, GTE Financial’s business services staff decided to bring the credit union philosophy to the small business community by focusing on building relationships and providing loans to local, small businesses, which competitors ignored.
The new strategy set lending targets at $750,000 and under. By building relationships with the local, small businesses, GTE Financial encountered less competition, more opportunity, and reduced risk. The new strategy has recovered interest income lost as a result of legacy portfolio issues, and the credit union has built a sustainable growth model for business lending centered on opportunities for small business in the Tampa area.
GTE Financial has successfully brought the cooperative credit union philosophy to the small business community after surviving an attempt at large, commercial lending.
►LOW-TO-MODEST MEANS: Texell Credit Union ($227 million in assets; 30,000 members)
Texell transformed its lending strategy to better serve a predominantly low-income membership base. That transformation propelled loan performance to the highest loan-to-share and borrower-to-member ratios in the credit union’s history.
Texell accomplished this while keeping delinquency and net charge-offs well below peer and industry averages. This year’s double winner places a high priority on financial literacy and complements that effort by offering affordable loan products that meet members’ needs. Some of these loans include:
Holiday Loans, a payday alternative extended, regardless of credit score;
Yes! Loans, aimed at members and potential members previously denied loans; and
Aspire Credit Card, a partially or fully secured card.
The credit union striives to fulfill its sales and service culture mantra of treating members fairly and with respect, regardless of their credit affluence. That philosophy has built a very loyal membership base; member surveys in 2012 rated their loan satisfaction score of 4.70 on a 5.00 scale, and 96% of respondents would recommend the credit union to others.
Judges for the 2013 Excellence in Lending awards: Consumer lending -- Patrick McElhenie, sales planner, CUNA Mutual Group; Stacy Fifield, SVP/CLO, Travis CU; Fawn Terwilliger, VP Lending, Service CU; Mortgage lending – Keith Troup, VP/CLO, WSECU; Jim Jumpe, marketing director, CMG Mortgage Insurance Co.; Bill Vogeney, EVP/CLO, Ent FCU; Business lending – Dale Frankhouse, business services director, Sun FCU; Tom Keepers, director, product management, CUNA Mutual Group; Bob Stowell, SVP/COO, US FCU; Low-to-Modest Means – Aaron Bresko, SVP/CLO, GTE Financial; Vicki Lovett, SVP/CLO, Suncoast Schools FCU; Dan Murray, VP Lending, CUNA Mutual Group.
A question was recently posed to CUNA’s compliance staff about the Right to Financial Privacy Act. Specifically, what type of documentation is required from a federal government agency when it requests financial information on a member?