Top 100 Lending Success Story

How does a credit union grow its loan to share ratio from 115% to 145% in 2 years and consistently be one of the Top 100 CUs in Lending?  Larry Kunkel, COO and Doug True, SVP of Lending and Technology of FORUM Credit Union, offer an insight into how that is done.

Number one, lending has to be a priority and a long-term strategy.  Lending has to be on the top of the to do list.  It can't be second third or fourth. Larry Kunkel, COO said, “We developed a long term strategy 20 years ago to be very good at lending.  We want to beat the competition in speed and convenience. Period. Our goal is to make good loans faster.”  Mr. Kunkel added, “We said in the 80's that investment income was going to be more difficult to make, so we made the decision to focus on improving the lending process.  Our goal was to be one of the best credit unions in simplifying the lending process and making it simple, fast and easy for our members to do business with us.”

The Importance of a Lending Culture

Mr. Kunkel said, “We created a culture lending culture, first you create a sales culture atmosphere, and then you put technology in place to make that happen.  It is not a mistake that Doug is the SVP of Technology and Lending. We wanted to make sure that the lending function could easily move the technology to support that goal. We didn't want to create any barriers to success.  We did not want technology to compete with lending; we wanted technology to compliment lending.  We try to be more nimble than our competitors.”

 

Key Statistics for FORUM Credit Union

Line Item	4-Dec	5-Jun	Jun-05
			PEER Avg.	Peer +/-
Total Loans / Total Shares	128.22	145.37	80.88	64.49
Total Loans / Total Assets	84.38	88.95	68.01	20.94
Loan Growth	16.81	30.21	12.05	18.16

Have a Core Competency

Mr. Kunkel said, “We wanted to create a core competency of being excellent at lending.

In the Indy market place, it is very competitive.  We constantly look ahead, and we study new loan products. We did not want to be a lender; we wanted to be experts in lending.  We wanted to make lending a competitive edge.  We are constantly stretching to get better and better. Now with a 146% loan to share ratio we are focusing on how to get more deposits.”

Doug True, SVP of Lending, said, “Now we are looking at new areas of lending.  We want to examine life style lending so we can offer more and better products to our members.”  Doug went on to say, “We see an opportunity in how Americans are using their discretionary income.”  Doug pointed out the following statistics: “Surgical and non-surgical cosmetic procedures in the United States has grown dramatically.  Some 8.3 million cosmetic procedures were performed in 2003—an increase of 293% since 1997, according to the American Society of Aesthetic Plastic Surgery.  Our goal is to go where the growth is, and get good at making those types of loans.”

8 Successful Lending Tools at FORUM forCredit Union

1. Technology complements lending, they don't compete.
2. It has to be a long-term consistent strategic goal.
3. Create a Lending Culture, it will not create itself.
4. Reward performance – what gets rewarded gets repeated.
5. Consistently look for new opportunities for growth.
6. Make the process simple, fast and easy and then look to make it faster, and easier.
7. Have a lending Mantra “We think we are pretty good but we want to go to great.” 
8. Many score boards, so we know how we are doing.

Mr. True said, “The lending success has been driven by our employees.  We have a good product mix, we reward employees to make good loans, and we give them the tools to be successful.  Growth opportunities for employees are with credit unions that grow.”

Hire the Right Mind Set

Mr. True went on to say, “Our lending success is dependent on our employees perspective.  “  We hire folks with the right mindset.  We look for employees that are sales driven and goal driven. We have goal sheets on a daily basis.  There are many scoreboards, and we know how we are doing.  Every day when an employee comes in they know if we are winning or losing.”

Technology is a Lending Tool

Mr. True said, “We have technology is an enabler.  We have developed the TAPS® Enterprise Lending solution to perfect the process.  The process is so efficient now that in many occasions in indirect lending we can beat the big boys to the punch.  We have learned with finance people at the dealership many times first one back wins. Our TAPS® system allows us to be very fast.”

Make Cross-Selling Simple

Mr. True said, “TAPS®, our lending system, allows MSRs to quickly offer other sales opportunities to our members.  If they are imputing data on a car loan, the system will recommend another opportunity for the member.  It will calculate it, and gives the employee the final numbers so there is no thinking on their part.  This way the employee can focus on how to help the member rather than trying to calculate the numbers themselves.”  Mr. True went on to say, “When a member applies for a car loan the system will recommend the appropriate product.  Once we have the car loan approved the employees will know if they can offer a second mortgage and save the member possibly thousands of dollars over the life of the loan. The key is saving money—that gets the member's attention.  In addition, for us rather than do one loan we do two or three loans for the same member.  It is faster and easier for everyone.”

“Get your Chin Out of Your Chest. “

“The TAPS® Enterprise Lending system allows the employee to focus on the member and not focus on a calculator, and adding the numbers. Let the system do what is good at, and let the employee do what they are good at, focusing on the member. Our technology system with TAPS® allows us to do that. Members are time starved, let the technology help everyone save time.”

Mr. True said, “Another key to success is our quarterly sales and service rally, most of the lending people, business lending, investments deposit area.  We recognize those who have given a great performance. Without enthusiasm nothing great was accomplished.”

Credit unions need to be patient.  Change does not happen overnight.  Mr. True said, “It took us almost 5 years.  We stayed consistently focused, and recognized a giant leap occurs with many almost invisible steps.  But we stayed focused, and now I think the numbers support our focus on lending success.  In 1988 we were about 50 million in assets, now we are almost a billion in assets.  It takes leadership and focus.”

Common Mistakes to Avoid

1. Pricing mistakes – avoid the one price fits all strategy.  “That is why we got into risk based pricing.  One rate does not fit all,” Mr. True said.
2. Missing opportunity mistakes – only fulfilling what the member asks for. Take advantage of the opportunity with your member to offer let them know how your credit union can save them time and money.
3. ‘Our members are happy' mindset—avoid assuming your members are happy.  It is the credit union's responsibility to let the member know what is available to them.  They do not know what to ask for.  Your employees should be ready to explain what we can do for them.
4. No service sell mentality. There needs to be a sales culture, so you pursue the opportunities that are present.
5. Only one delivery channel—offer members multiple delivery channels. A member may need a first mortgage or a construction loan—but whatever they need, they want to talk face to the face and for us to be prepared to come to them if that is necessary.
6. Charge the right price for the upper tier—we have to make sure we are able to grow. Net income today is for tomorrow's member.
7. Make it easy to reach us—the human touch and conversation are important.  Take advantage of your call center.  Avoid '50 questions to get a loan.'  Be helpful and flexible.  Make the process simple, fast and easy.

FORUM Credit Union is a Top 100 Credit Union in Lending because of their focus, and expertise in Lending.