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When your credit union has growth potential but it’s not meeting expectations, what’s the spark that gets it moving? For Tarrant County Credit Union, Fort Worth, Texas, that spark was awareness, says Lily Newfarmer.
When she became CEO in 2001, the credit union’s assets were $24.6 million and it had 5,046 members. Today, assets have increased 174% to $67.3 million, and membership has nearly doubled to 9,949.
“We drilled down a little more and ratcheted up awareness,” she says. “We added a full-time business development position to tell our story and to dovetail with the marketing effort.”
Community and field-of-membership awareness were boosted through a campaign with the tagline, “We do that!” to publicize the credit union’s robust line of products and services.
Another factor in Tarrant County’s impressive growth is incentives—for staff and members—to:
► Attract more checking accounts;
► Attract new members;
► Increase debit card use; and
► Expand members’ use of core services.
One promotion had a goal to increase the number of checking accounts by 350.
The incentive for staff was an iPad to the employee who captured the most referred/opened checking accounts and issued debit cards. The incentives for members included free debit card personalization, a free computer screen cleaner, and a chance to win an iPad.
The credit union met its goal, the iPads were awarded, and community awareness increased.
Sometimes, however, members have more complex needs, says Newfarmer.
In 2007, when the credit union’s field of membership was Tarrant County employees (it’s now a community credit union), a data sampling of members showed that 12% were using payday lenders.
While that’s low compared with most financial institutions’ estimates, this data gave Newfarmer hard evidence of the need for payday loan alternatives. She led the credit union in instituting several options:
► An early-bird checking account, which gives members who sign up for direct deposit a one-day float for depositing their payroll.
► A payday alternative loan product, with a six-month repayment period, starting at a maximum 18%, and reducing to 15% when borrowers meet certain repayment criteria. It includes financial counseling and free financial education classes.
► Second-chance checking for members who’ve had trouble maintaining checking accounts in the past. The account requires no minimum initial deposit, no minimum balance, and no monthly fees. It includes free financial education classes.
The main thing is to find ways to help, says Newfarmer, adding, “Don’t be so afraid that it stops you from helping your members.”
Since its inception in 2008, the payday alternative loan program hasn’t had a “hiccup,” she says. “We’ve made 2,741 loans totaling $1.2 million, with minimal losses of approximately $10,000.”
Recently the credit union—whose loan-to-share ratio has averaged 96% during the past 10 years—began analyzing denied loans to provide additional help to members. Plus, Newfarmer realized the credit union had additional potential in C- and D-paper loans.
“We’ve trained our loan officers to dig deeper on these so we can do more loans,” she explains.
Retraining lending staff to dig deeper on loan decisions has contributed to the credit union’s continued loan growth, which has averaged 18.25% during the past six years.
Delinquencies and charge-offs, which both stand at 0.3% of total loans, haven’t increased, leaving room to continue helping higher-risk borrowers.
It goes beyond finding ways to increase the bottom line, she says. The commitment is about helping people help themselves.
“Credit unions keep talking about how we’re not-for-profit,” she says. “But there’s so much more to our cooperative structure. When your focus is on service and your commitment is to the member, the income will follow. But it takes courage and a strong belief in your product and your ability to deliver it to put yourself out there.”
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