By Dane Coalson

State Employees’ Credit Union (SECU) of Raleigh, N.C., ($15.9 billion) introduced a Million Dollar Sweepstakes in 2007 to encourage member checking account holders to convert from paper statements to e-statements. The Sweepstakes was intended to educate members on the cost to their credit union each month to print and mail paper statements and how members directly benefit when SECU is able to improve efficiency. The Million Dollar Sweepstakes began in January 2007 and ran through December 7, 2007. In order to dissuade members from switching to e-statements to become eligible for the contest and then switching back, the contest was scheduled to last a full year. Over the course of 2007, one hundred members won $5,000 a piece and 20 lucky members won $25,000 each. The first drawing was held in February, and eleven subsequent drawings were held through December 2007, resulting in $1,000,000 in member awards. 

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By Dane Coalson

Altura Credit Union ($940 million) is located in Riverside, Calif., at the epicenter of the housing crisis. Despite the difficult economic environment, Altura grew in 2007 while maintaining a high level of service and reaching out to members in distress.

Addressing the Housing Crisis:
At the end of 1Q 2008, NCUA examiners wrote Altura: “Try to keep your members in their homes if at all possible.” The examiners suggested loan extensions as a way to alleviate the financial strain on distressed members.

In February, Altura and their CUSO, Patrion Mortgage, held a public seminar for persons in the community who were having trouble meeting their loan payments. About 100 members and non-members attended. At the seminar, the credit union gave a presentation covering various options individuals could pursue to manage their debt and mortgage payments. Afterwards, some attendees asked for assistance; they answered questions from Altura loan officers and filled out loan applications. The loan officers then appraised the properties, evaluated the information, and presented loan proposals to the credit union.

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By Cathie Tierney, CEO of Community First CU in Appleton, Wisc

Community First CU of Appleton, Wisc., ($1 billion in assets, 77,000 members), a 13-county community charter credit union that is the third largest in the state, held a four-day loan sale beginning January 31. This was the day after the Federal Reserve unexpectedly dropped interest rates 75 basis points prior to their regular meeting; Community First’s pre-made ads (they plugged in the interest rate once the Fed’s regular announcement – an additional .50 bp drop - was made) hit the airwaves within 24 hours of the Fed’s lowering began making news headlines. The credit union offered rates as low as 3.95% on any secured loan, real estate and refis included (the rate was guaranteed for five years). The lowest rates were for the best credit and for loans of at least $10,000 in new money. Persons taking advantage of the loan sale had to have a direct-deposit checking account with the credit union. Community First was hoping for $35 million in loans but got 2,000 calls on the first day and over the four days received 3,000 applications for $158 million in loans. [For more on the loan sale, see the February 2008 Callahan Report –ed.] Cathie Tierney is CEO.

How did the loan sale turn out for you?

CT: It was amazing. We wrote $149 million in loans. Ninety-three percent of the applications were approved. The other 7% were not necessarily poor credit risks; the applicants may have balked at giving us their checking or direct deposit. Thirty-one percent of the applicants were new members, who opened 696 new direct-deposit checking accounts with us. Seventy percent of the $149 million was new money.

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By John Hirabayashi, President & CEO of Community First CU of Florida

Community First CU of Florida began in the Depression as the credit union for teachers in Duval County. It now is the ninth largest credit union in Florida with $1.2 billion in assets and more than 100,000 members. It serves a number of counties in northeastern Florida as well as education-related SEGs (colleges, private and public schools, etc.); it is headquartered in Jacksonville.

You are in one of the states most affected by the mortgage problems. When did you begin to see problems and how did you react?

JH: Yes, Florida and California are the two hardest hit states I believe. We began to see problems last summer. This was after many subprime-related problems were being written about in the press; I think the mortgages with more traditional underwriting – such as ours – saw their troubles coming later.

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By Mike Valentine, CEO, Baxter Credit Union

2007 turned out to be a challenging year for net income.  A continuing margin squeeze coupled with a large increase in loan delinquencies and write-offs resulted in a strained ROA.  We experienced increased losses across all of our products and geographies.  We definitely see this trend as part of a broader shift in the credit cycle that is testing our risk management assumptions and pricing strategies.  The initial attention on subprime mortgages has obviously grown to a much more far-reaching strain on the economy.
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