Firing up a tired loan portfolio

January 26, 2010

During 2008, New Orleans Firemen’s Federal Credit Union’s loan portfolio was mired in a slow decline. Loan application volume was healthy, but too many loans didn’t close due to inadequate employee follow-up, long decision times, and overly stringent lending guidelines.

CU: New Orleans Firemen’s FCU
Challenge: Declining loan portfolio
Solution: Embrace every loan opportunity
Result: Biggest loan volume increase in 75 years
Award: Consumer lending (less than $250 million in assets)

Add to that a lack of cross-selling and low loan yields, and the credit union concluded something had to change.

Enter Jeff Caire, who brought a fresh perspective as new lending director for the $127 million asset credit union. “Our new lending strategy became very simple: We wanted to generate as many loans as we could by looking at every opportunity,” he says. “We didn’t want to lose any more loans due to decision timing and follow-up issues. We also needed a better pricing strategy that would increase our yield.”

After meeting and working with lending specialist Brett Christensen, NOFFCU management team developed a plan of action. Under Jeff's supervision the credit union initiated the following changes:

  • Enhanced an existing a "Steal a Deal" incentive program. With this plan, front-line employees earn 0.5% of every extra loan they bring to the credit union from another institution. This promotion generated 96 auto loans totaling $2 million during 2009.
  • Identified the best cross sellers on staff at the credit union and changed their job description and salary structure to that of an outbound salesperson.
  • Hired an outbound salesperson to bring members’ business at other financial institutions to New Orleans Firemen’s Federal.
  • Developed a centralized underwriting department that reviews and prioritizes loans quickly.
  • Eliminated burdensome verification procedures for A and B members, including income verification, proof of loan and collection payoffs, and so on.
  • Created a new risk-based pricing matrix based on the member’s credit score. This is used to price approved loans, not make loan decisions.

The result: a $9 million increase in its loan portfolio during 2009—one of the worst lending environments in decades.