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.

Continue Reading Four-Day Loan Sale and Results »

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.

Continue Reading Steering a Credit Union in a Mortgage-Crisis Area »

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.
Continue Reading Challenges but Also Opportunities »

By Ray Cromer, CEO, Envision Credit Union

The key lesson we took away from 2007? Don’t Panic!  Having been in the credit union arena for over 40 years, this market cycle, too, shall pass.  Actually, Envision did better in 2007 than in 2006, because we stayed the strategic course in all the fundamental areas — core loan products and competitive savings rates — without trying to grow the assets.

We expect more of the same in 2008 and we expect a doubling of our net revenue over 2007.  While we’re well capitalized, we don’t want to be too conservative about growth in the asset base.  Our home loan portfolio is very strong and productive, as is, surprisingly, our credit card portfolio.  These will be the key product lines, while automobile loans have and will continue their trend down in importance in our mix.

Our strategy will be consistent and predicable in light of the credit markets meltdown.  However, we see a great opportunity in our CUSO to expand upon our offerings to the more than 85 credit unions we currently serve.  We believe that cooperation among credit unions via CUSOs is one way conservation of resources can take place, while exploring new ways of jointly providing the infrastructure each of our credit unions need for seizing upon new opportunities.  From data processing to human resources, from member business lending to managed network services, credit unions can benefit through collaboration and “co-opetition.”  CUSOs offer that final frontier where credit unions can still be friends with one another.

By Ron Burniske, CEO, Chartway FCU

Chartway is a consumer lending organization; as the individual markets are more saturated, the competition for one sale has become more intense. In 2007, we came to a realization that even the credit union industry has lost cohesion. Credit unions are competing with their brethren — opening branches across the street from one another to gain new business rather than serve the existing membership. For some, the cooperative spirit has deteriorated into “only if it doesn’t hurt us, then we’ll help”.
Continue Reading Stepping in with Excess Liquidity »