Early in his tenure as president/CEO of $140 million asset PSE Credit Union, Joseph Anderson set out to “revolutionize” the Parma, Ohio, institution’s approach to lending.
"It all came from out of first strategic planning session,” says Cheryl Schill, PSE’s vice president of lending. “We needed product changes, enhanced automation, and definitely less paper.”
PSE also had a reliance on indirect lending that Schill likened to “a runaway train.” Indirect lending accounted for 46% of the credit union’s loan portfolio.
“That helped us find our strategic focus,” Schill says. “We wanted to bring it all back to our members. From that meeting, we come up with two strategic goals. One was to create more ease of execution. The other was to grow our home equity loans.”
PSE Credit Union won an Excellence in Lending Award for consumer lending (less than $500 million in assets) during the 2019 CUNA Lending Council Conference.
Looking at member credit reports and account records, PSE knew its members were turning to other financial institutions.
In response, the credit union restructured its home equity platform with three options: Fixed equity, a traditional home equity line of credit (HELOC) with a monthly variable rate, and a HELOC with a semi-annual variable rate.
As for the process, “we had to determine the key components to start the application and keep it moving, removing all points of friction along the way,” Schill says.
The credit union created a tracking sheet documenting each stage of the application process, keeping the loan processor, loan officer, and member informed as the application progressed.
“We streamlined the process wherever possible,” Schill says. “We wanted to create a seamless experience, not just for the member but for the loan officer and the loan processor as well. If they feel points of friction, that will be reflected throughout the entire process.”
‘We wanted to create a seamless experience.’
The credit union also worked closely with title agencies and appraisal companies during the restructuring.
Once members received tentative loan approvals, PSE provided a loan summary form including the amount financed, loan term, interest rate, and payment amount.
“Again, the loan officer, loan processor, and member were fully informed,” Schill says. “Communication is key here.”
At closing, PSE introduced an electronic signature solution so members could sign off in any location via mobile, desktop, or tablet.
“That truly gave us the ability to meet the members where they were,” Schill says.
Schill also created a data analytics report to monitor loan balances, FICO scores, weighted average yield, lien position, interest rate, and combined loan-to-value ratio among other metrics.
PSE focused its marketing campaign for the new HELOCs within a five- to seven-mile radius of its branch locations with billboards, building and branch signage, and mailings, supplemented by Google Ads and Facebook pay-per-click marketing.
The credit union funded these efforts with spending previously allocated to indirect lending.
“The byproduct of that was increased awareness in the community,” Schill says. “I was in line at Starbucks wearing my PSE logo shirt and the cashier said, ‘PSE Credit Union! I got my home equity loan from you. I love you guys!’ All these people turned around and looked at me. That’s when I knew we were doing something right.”
The results bear this out. The credit union achieved a 237% increase in home equity loans and saw its loan portfolio grow 21% in 2018.
“We have a great group of employees here,” Schill says. “It was really a matter of asking our employees what works and what doesn’t work, and what’s the best way to get information across. Today, everything is about meeting consumer needs and ease of execution. We did a pretty good job with that.”
► Learn more about the CUNA Lending Council's Excellence in Lending Awards, sponsored by CUNA Mutual Group