Employees Of A Feather, Succeed Together

Upper Cumberland increases loan generation by tearing down departmental silos.

 
 

Located in Crossville, Tennessee — a midpoint between Knoxville and Nashville — Upper Cumberland Federal Credit Union ($30.9M) is growing substantially, despite serving a financially conservative demographic that consists mainly of retirees.

Originally chartered to serve employees of Dennison Manufacturing, UCFCU moved to a community charter in 1995 and is currently bolstered by the presence of three fast growing retirement communities within its footprint.

As of 3Q 2012, Upper Cumberland has achieved 7.8% membership growth and a whopping 32.5% loan growth annually, according to Callahan & Associates’ Peer-to-Peer software. Yet much of this small credit union’s success hinges upon one very simple construct — encouraging employees to think institutionally, not individually.

Staff Like You Mean It
“Members in our area want loans turned over quickly and we try to honor that,” says Denise Cooper, UCFCU CEO.

With 19 full-time employees, the credit union may appear overstaffed for its asset size. But with an 86% loan-to-share ratio, its loan shop more closely resembles that of a $40M-$50M institution, Cooper says.

LOANS ORIGINATED PER EMPLOYEE
DATA AS OF SEPTEMBER 30, 2012
© Callahan & Associates | www.creditunions.com

loans-originated-per-employee-upper-cumberland-2012-q3

Generated by Callahan & Associates' Peer-to-Peer Software.

To increase the return on its substantial investment in employees, UCFCU staff all carry the title of member advisor regardless of their job focus and all are trained to contribute across the entire organization. For example, loan officers are often tapped to work some days as a teller or in another member service channel. Other times, employees from the credit union’s sole branch location will be called to work at the corporate headquarters or vice versa.

Prepping these individuals to handle multiple facets of the business is a big advantage for Upper Cumberland, allowing it to develop an institution-wide sales emphasis, without obscuring its service focus.

Give Employees Products Worth Selling
In January of 2012, the credit union retooled several underutilized products and services to encourage more balanced growth across the portfolio, focusing mainly on key targets like autos and mortgages

“Our board was able to set some great rates, like a 2.75% used car loan for credit scores 680 or higher and a 3.99% rate for a 10-year fixed mortgage with a $75,000 maximum,” Cooper says.

12-MONTH LOAN GROWTH
DATA AS OF SEPTEMBER 30, 2012
© Callahan & Associates | www.creditunions.com

loan-growth-upper-cumberland-2012-q3

Generated by Callahan & Associates' Peer-to-Peer Software.

These offerings greatly expanded the ability of UCFCU staff to cross-sell to the institution’s main demographic. As of 3Q 2012, the credit union’s average member relationship is roughly $10,000 —compared to a peer average of just $3,500.

“When a member comes in for a product, employees really take the time to highlight all that we provide,” Cooper says.  This messaging was also boosted by a 2011 redesign of the credit unions logo, which now highlights the various types of products and services the institution is able to offer.

“We also have a lot of people in the area trying to consolidate their obligations and lower their debt ratio, which brings a lot of refinance business to us,” Cooper says. In the first ten months of 2012, UCFCU employees were able to save members a combined $220,000 in refinanced autos alone.

The ability to offer good products, tangible savings, and unique service touches — like offering a quarter percent off rates for using automatic payments or providing CARFAX reports to guide members toward wise auto purchases — allows employees to further differentiate their institution from other lenders in the area.

“We’re ok with spending a little bit more in order to really do things right,” Cooper says.

Take The “I” Out Of Incentives
Rather than structuring goals and incentives according to individual departments or individual employee performance, Upper Cumberland blankets both loan responsibility and reward across every business unit.

Currently, all employees receive a separate monthly bonus when each of these benchmarks are hit, regardless of their department: a loan-to-share ratio of 80% or higher, a delinquency rate of 0.5% or lower, and net charge-off rate of 0.5% or less. In 2012, these incentive payments totaled $2,900, a benefit further complimented by a matching $2,900 bonus from the institution at year’s end.

“We wanted to highlight to all of our employees that these three metrics really count,” Cooper says.

This style of incentive has not just been good for employees but for the institution as well. As of 3Q 2012, Upper Cumberland maintains a 0.1% delinquency rate and a 0.37% charge off rate across its loan portfolio, compared to a peer average of 1.4% and 0.56% respectively.

DELINQUENT LOANS/ TOTAL LOANS
DATA AS OF SEPTEMBER 30, 2012
© Callahan & Associates | www.creditunions.com

delinquent-loans-upper-cumberland-2012-q3

Generated by Callahan & Associates' Peer-to-Peer Software.

The presence of a delinquency component encourages loan officers to make good loans, as opposed to being focused solely on volume. Likewise, front-line staff also have a reason to encourage delinquent members to come see the institution’s sole collector officer, or provide insight into the member’s situation (job loss, family issues, change of address, etc.) that may be relevant to the collection process.

Although some institutions might fear backlash from top performers who have to share the reward with their peers, Upper Cumberland says it has not experienced any such sentiments among its employees.

“Loan officers understand they may never have had the opportunity to make those loans without tellers or other employees encouraging members to apply,” Cooper says. “They understand that cooperation across departments provides job stability for the entirety of our staff.”

 

 

 

Jan. 7, 2013


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