That’s how CUNA Economist Mike Schenk describes the spate of healthy loan growth at credit unions nationwide.
If estimates hold true, expect another year of double-digit loan growth in 2016, Schenk says. This would mark three consecutive years of double-digit loan growth, and six straight years of growth since the end of the Great Recession.
But is this growth sustainable? It depends, Schenk says, on factors such as local economic conditions, your credit union’s field of membership, and your credit union’s resources.
While credit unions are seeing broad-based loan growth, much of the growth is fed by new-auto loans, with a 15.5% increase in the year ended June 2016. Plus, member business loans and used-auto loans increased 13.7% and 13.2%, respectively.
Membership also has increased in part because of indirect lending. But converting those indirect members to loyal members who use more products and services is a tough job, credit unions say.
That shouldn’t stop you from putting strategies in place to tackle this challenge.
Honor Credit Union in Berrian Springs, Mich., for example, has converted 21% of indirect members to additional products. Onboarding these members is important “because you’re already running on thin margins based on the competition in the marketplace,” says T.J. Kempf, vice president of lending for the $699 million asset credit union.
Honor and other credit unions convert indirect members through a variety of measures, such as building solid dealer relationships, employing outbound calling, communicating the credit union brand, and focusing on credit cards as a follow-up service.
These strategies all add up to deeper relationships. That’s the key to lending success overall, Schenk says, and it should be the foremost topic at every board strategic planning discussion.
“Engaged members, especially members who are borrowing, are key to credit union success,” he says. “Strong loan growth boosts credit union earnings, buoys capital ratios, and sows the seeds for future growth.”
Members’ personal balance sheets are healthier today so they can and want to handle more debt.
That’s why Schenk and others remain optimistic that 2017 will bring solid, though perhaps marginally lower, credit union loan growth.
ANN PETERSON is editor in chief of Credit Union Magazine.