The recession proved a difficult environment for credit union loan portfolios. Members were uncertain about jobs and hesitant to make large purchases that required financing. But there’s a saying about a will and a way.
According to fourth quarter data, Star One Credit Union ($5.4B, Sunnyvale, CA) grew the volume of loans originated in 2010 47% over 2009 levels.
The credit union’s success during the fourth quarter is a backlog of what happened during the third quarter, says Kevin Collins, senior vice president of loan services at Star One. In addition to the fourth quarter activity, the sheer volume the credit union originated in July through September took time to hit the books.
Star One is a portfolio lender and has not sold any mortgages to the secondary market this year. As such, the loan volume enhances its balance sheet. Total loans grew 14.0% over 2009 levels.
As the recession intensified, jittery local brokers and banks withdrew from the market. In the vacuum, Star One shined.
“We were doing the same thing we’ve always done,” Collins says.
The “same thing’” is a basic but effective strategy. Convenience is a big factor. Star One partners with Prime Alliance to offer an online application system that makes it easy for members to submit information. According to Collins, almost 100% of the credit union’s loan applications come through the online channel, which allows the credit union to keep pricing low and staffing at a minimum.
Star One also offers a modification program. Rather than refinancing a loan, the credit union ensures a member is in good standing on a loan and then charges a fee to cut a half-percent from their rate. The initiative keeps members from shopping around.
Star One’s programs mesh well with its member base, whose tech-savvy and strong credit scores make then attractive borrowers.
Last year was a good year for Star One, and 2011 looks promising, too. Its staff recognizes the lending environment will be less-than-ideal (specifically for auto and VISA balances), but the growing asset class student loans represent is encouraging.
Collins emphasizes the importance of strong marketing campaigns in informing members about mortgage options. He also underscores the valuable business opportunity in making members feel safe.
Star One is an example of the safe haven credit unions offered members during a difficult economic time. The attitudes, practices, and products cultivated during the economic downturn will serve the credit union and its members well as the economy rolls back to life.