Lending

Regain Your Share of Members' Loans

Five tips for building your loan portfolio.

August 17, 2013
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In the quest for growth and profitability, many credit unions have found a new focal point: existing members. They’re seeking more business—or wallet share—from the members they already have. And many credit unions are finding plenty of room for growth.
 
Consider that 85% of credit union members also have accounts with banks, according to the 2013-2014 CUNA Member and Nonmember Survey Results.
 
That means many members do a lot of business elsewhere, which represents a big challenge—and opportunity.
 
While members’ use of convenience services is—for the most part—evenly split between banks and credit unions, members seem to turn to banks more often for loans, CUNA reports.
 
Since 2009, credit unions have slowly lost their share of members’ vehicle loans, first mortgages, and home equity loans or lines of credit.

Four years ago, credit unions had 74% of their members’ vehicle loans. Now, they have 57% of those loans.

To regain lost wallet share and build their loan portfolios, Bill Vogeney, senior vice president/chief lending officer for Ent Federal Credit Union, Colorado Springs, Colo., advises credit unions to take these five steps:
 
1. Offer a reduced rate to members who have low balances on their current auto loans.
 
2. Review existing home equity lines of credit and offer special incentives on new advances to members with low levels of credit-line utilization. These loans have already been booked and you’ve already expensed most, if not all, of the origination costs.
 
3. Avoid the trap of increasing unsecured lines primarily on “slam dunk” borrowers who have high credit scores and owe little on their credit lines. High-potential accounts are more likely to have FICO scores of less than 700, owe 80% or more of their cumulative revolving lines, and owe within $500 of their credit limits.
 
4. Stop relying on marketing campaigns that reach members only once or twice. Integrate prequalified credit offers into electronic statements, and combine email reminders into the “offers” section of your home banking and mobile banking platforms.
 
Keep front-line and call center staff in the loop—they’re the most effective at reaching members and making sales.
 
5. Dedicate more resources to analyzing loan denials. Look at a large sample of your denials and you might find some overlooked opportunities.
 
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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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