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Member loans don’t simply walk in the door now as in boom times. As a result, credit unions have retooled to help staff recognize and act on lending opportunities that also benefit members.
Goldenwest Federal Credit Union, Ogden, Utah, aims to grow its loan portfolio by 5% this year. “It’s a big challenge considering all the debt consolidation and loan repayments among our membership,” says Kerry Wahlen, president/CEO of the $806 million asset credit union. “But I expect us to succeed.”
With mortgage rates at 40-year lows, he’s seeing numerous refinances. “Members consolidating debt at 30-year rates of 3.25% are able to consolidate a lot of consumer debt, which makes growing our loan portfolio more difficult,” Wahlen says.
While there hasn’t been a dramatic change, local real estate values have stabilized. Plus, low interest rates allow members to pay down loans more quickly. This has helped Goldenwest Federal grow its home equity lines of credit.
“With interest rates so low, the principal contributions in first mortgage payments are so great that people are building equity in their homes,” Wahlen says.
The credit union embraced an aggressive sales culture eight years ago, and Wahlen credits that change with helping to attract loans during tough economic times. “We recognized that to be successful in the future we had to have a dynamic, sales-oriented business in all areas of the credit union. Loans were a major focus.”
Goldenwest Federal’s loan-to-share ratio hit a low point about two years ago, but has increased to about 66% now—and it’s Wahlen’s goal to grow it further.
“We slowed deposit growth to try to increase this ratio,” he explains. “We looked to recalibrate our mix of deposits and reduced the number of [share certificates] with members who don’t have other relationships with us. We still have competitive [share certificate] rates, but we’re not marketing them publicly.”
To transform to a sales culture, the credit union hired a sales manager and did extensive staff training. “Now, from the CEO down, all staff look for opportunities to cross-sell products,” Wahlen says. “We engage our employees with contests and incentives to cross-sell consumer loans.”
Goldenwest Federal decentralized its lending process as well. “We gave staff decision-making authority. Each of our 20 branches has the independence to make loan decisions for the most part,” Wahlen explains. “We have guidelines and approval standards, but loan staffers actively participate in the decision process.”
He considers his credit union’s loan pricing to be “moderately innovative.” And Goldenwest Federal has a full spectrum of marketing campaigns in both traditional and online media.
“But our great member service is our best selling point,” Wahlen says.
He believes credit unions need to be both creative and persistent in making loans. “Today’s market is so competitive and difficult that you have to get after it in every possible way.”
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